Shares of Avenue Supermarts Ltd plunged as much as 7.5 per cent to Rs 1,306.15, their biggest daily percentage loss since September 10.
The company, which runs supermarket chain DMart, had on Saturday reported about 18 per cent rise in September-quarter net profit to nearly Rs 226 crore ($30.60 million). EBITDA margin for the quarter fell to 8 per cent from 9.1 per cent in the year-ago period.
IIFL said in a research note that the aggressive pricing led to an EBITDA margin contraction of 8 per cent during the quarter.
Citi says that strategically there's no issue in the company’s competitive approach and gaining share (and bargaining power with suppliers) but the impact of margin fall could affect the stock price and elevated expectations in the near term. The brokerage has maintained sell rating, and a price target of Rs 1,255.
About six of 15 brokerages covering the stock rated it “buy” or higher, two hold and the rest “sell” or lower; their median price target is Rs 1,270.50, according to Refinitiv data.
More than 865,989 shares changed hands as of 0503 GMT, nearly double their 30-day moving average of 512,441. Avenue Supermarts stock had gone up about 20 per cent this year as of last close ($1 = 73.8325 Indian rupees).