Retail area Q2 Audit: ABFRL benefit floods multiple times while VMart posts misfortune
The Retail industry continued to report a healthy recovery in the September quarter (Q2FY23) as the segment witnessed improved footfalls. In addition to reporting a healthy YoY growth, revenue for most retailers crossed pre-pandemic levels (Q2FY20), indicating a recovery from the COVID impact.
During the quarter, one retail stock gave multifold returns, net profit of 5 stocks surging over 30 percent while 2 witnessed a decline in profit and one posted a loss in Q2.
Aditya Birla Fashion and Retail (ABFRL) reported over a five-fold jump (411 percent) in consolidated net profit at âš29.44 crore in the second quarter of FY23, led by robust festive sales and consistent performance from e-commerce channels. The company had posted a net profit of âš5.09 crore in the same quarter last year.
Its revenue from operations rose 49.66 percent to âš3,074.61 crore during the quarter under review as against âš2,054.34 crore in the corresponding period of the previous fiscal. The Aditya Birla group firm achieved its “highest quarterly revenues” in Q2 FY23, the company said in its earnings statement.
In an earnings review note, brokerage house Motilal Oswal pointed out that ABFRL management expects overall revenue for FY23 to range between âš12,000 crore and âš12,500 crore, with higher sales expected in the second half of the financial year FY23. It also expects annual capex for FY23 to range between âš700 crore and âš750 crore, with plans to open 60-70 total stores under Pantaloons, noted the brokerage.
Meanwhile, Edelweiss said that ABFRL posted strong revenue growth across segments and continued to expand its footprint (106 brand stores and 947 MBOs in Q2FY23).
“We expect this performance to continue in H2FY23 on account of the strong wedding season and aggressive store expansion. However, we expect margins to remain under pressure due to anticipated increases in advertisement spends and other overheads (owing to normalisation of operations),” the brokerage stated.
With a strong focus on store and brand expansion, it increased its revenue estimates by 7 percent for FY23E and FY24E but reduced our earnings estimates by 5 percent for FY24E considering the higher operating costs.
After ABFRL, Avenue Supermarts reported a nearly 63 percent YoY rise in net profit for the September quarter to âš730.48 crore. Revenue for the quarter rose nearly 36 percent on year to âš10385 crore.
Avenue Supermarts has been a consistent compounder with the stock price increasing at 35 percent CAGR in the last five years. “DMart continues to remain Indiaâs most profitable low-cost retailer and a strong play on Indiaâs retail growth story and a key beneficiary of unorganised to organised segment shift,” brokerage house ICICI Direct said.
Metro Brands also reported a 50 percent year-on-year growth in its net profit for the September quarter. The company’s bottom line grew to âš102.7 crore in the September quarter from âš68.3 crore during the same period last year. Its consolidated revenue grew 47 percent year-on-year to âš476 crore during the quarter under review.
“The management has guided at a gross margin of 55-57 percent for all formats. It reiterated its guidance of 260 stores over the next three years. This should increase with the addition of FitFlop and the Cravatex acquisitions,” said MOSL.
Meanwhile, Bata India reported a 47.44 percent rise in consolidated net profit at âš54.82 crore in the second quarter ended September 2022, helped by increased footfalls at stores. The company had posted a net profit of âš37.18 crore in the July-September quarter a year ago, Bata India Ltd said in a BSE filing.
Its revenue from operations during the quarter under review was at âš829.75 crore, up over 35.11 percent from âš614.12 crore in the corresponding quarter of FY22.
“Despite tough operating environment and significant material inflation, the company managed to drive broad volume driven revenue growths across business channels of retail/franchise/distribution/e-comm,” said Bata India in its earnings statement.
ICICI Securities likes Bata India as it has a strong balance sheet, diversified branded product portfolio, and pan India network enabling sustained long-term profitable growth.
Further, Titan and Trent posted over a 30 percent rise in their net profit. Titan reported a 34 percent year-on-year (YoY) rise in net profit for the September quarter to âš857 crore. Total revenue from operations increased 22% on year to âš8,730 crore,
Whereas, Trent reported an on-year 41 percent jump in standalone net income at âš193 crore in the September quarter, driven by robust revenue. Revenue, including GST, rose 78 percent to âš1,929 crore, which is the highest ever for a quarter, the company said in a statement.
However, footwear brands Relaxo and Campus Activewear reported a 67 percent and 48 percent decline in their net profit in the September quarter mainly due to higher raw material prices.
Relaxo management said that consumers were facing inflationary pressures, which affected their affordability and they had started moving to cheaper alternatives even at the cost of quality. Hence, the company took an aggressive price correction in September 2022 to be competitive in the market, it said.
Finally, V-Mart posted a net loss of âš11.31 crore in the quarter ended September 2022, which narrowed as against âš14.14 crore in the same quarter last year. Its sales, however, jumped 50 percent to âš506.16 crore in the quarter under review from âš337.97 crore last year.