The increase in revenue was 18.1%, resulting in a 19.0% compound annual growth rate. The sales density has remained poor in comparison to the level it was at before the pandemic (about INR34.2k/sq ft in Q1FY24 as opposed to INR36.7k/sq ft in Q1FY20; comparable). Lower discretionary spending in comparison to levels seen before the pandemic kept underlying profitability and unit economics in a poor state. On the other hand, the contribution of general merchandise was heading towards levels seen before the pandemic. As a result, gross margin pressures continued (14.6%, -125bps YoY; vs. HSIE: 15.0%), and EBITDAM decreased -133bps YoY to 8.9% (HSIE: 9.0%). The discipline with regard to both costs and the deployment of capital has not been compromised.

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Outlook

We take into account reduced sales density and GMs and retain SELL by lowering our EPS projections by 5% for FY24 and 3% for FY25/26, with a DCF-based TP of INR3,200/sh, meaning 55x Sep-25 P/E.

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Avenue Supermarts – 17 -07 – 2023 – hdfc

The post HDFC Securities recommends selling Avenue Supermarkets at a price of Rs 3200. appeared first on Republic Aeon.

The growth rate of Central Depository Services India Ltd (CDSL) slowed in FY23 after two years of rapid expansion (>50% YoY in FY21-22, driven by 4/4x jump in transaction revenue/Demat accounts). The annuity stream (annual issuer charges, e-voting, and e-CAS) grew by 30% YoY in FY23, offsetting the 17% fall in market-linked revenue (transaction, IPO, and KYC (fetch)). As a result of the aforementioned factors, we anticipate that the company’s growth will pick up speed in FY24E. Specifically, we anticipate that (1) BO account addition will pick up, (2) transaction revenue will increase due to increased delivery volume, and (3) the annuity income stream will continue to rise. With a 73% market share and an 85% incremental share, CDSL remains at the forefront of the BO market. Approximately 2 million new accounts are being added to CDSL each month, increasing 46% year over year but down 36% from the peak. With a 25% market share, the insurance possibility will increase revenue by about 7%. This is an option value (regulatory push). Our revenue, EBITDA, and APAT CAGR estimates for FY23–FY26 have been revised upward to 18%, 21%, and 20%, respectively.

Outlook

We are increasing our recommendation to BUY from ADD and setting our TP at INR 1,470, or 37x June-25E EPS. The average P/E for the next three years and the next five years combined is 42x and 32x, respectively. CDSL has a Return on Equity (ROE) of 24%, Return on Invested Capital (ROIC) of 78%, a Cash Conversion (5Y Avg) of >80%, and Net Cash (INR 10.6bn, or 9% of Market Cap).

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CDSL – 14 -07 – 2023 – hdfc

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The post Buy CDSL with a target of Rs 1470: HDFC Securities appeared first on Republic Aeon.