Shares of Avenue Supermarts
are currently down 22% from their 52-week high of ₹5,484.85, which was hit in September last year.
CLSA wrote in its note that Avenue Supermarts is clearly focused on accelerating store additions to drive sales growth. It also pointed out the company’s push into private labels as a key element of its long-term competitive moat.
While near-term margins are expected to remain volatile due to the pace of business expansion, CLSA said that the company has a well-defined strategy for its e-commerce arm, DMart Ready, aimed at bridging the gap between value and convenience formats.”This clarity of focus increases our confidence in what we view as the biggest multi-decadal opportunity in Indian retail,” CLSA said.
The company is planning to ramp up its expansion, particularly in Northern India, with Neville Noronha overseeing real estate development.
On Tuesday, Avenue Supermarts opened a new store in Pathankot, Punjab, taking its total store count to 426, according to a regulatory filing. A week earlier, the company had opened another outlet in Pune.
For the June quarter, Avenue Supermarts reported a 16% year-on-year increase in revenue, though margins narrowed by 80 basis points, compared to the same quarter last year.
Shares of Avenue Supermarts closed 6.75% higher on Wednesday at ₹4,269. The stock has gained 20% so far this year.
