UBS Global Research is expecting that Avenue Supermarts will likely enter a phase of significant network rollout acceleration. The retailer can add 230–250 stores in next three years, unlocking an accelerated growth trajectory. Same-store sales growth in the previous year erased worries about rise of e-commerce. The business model to cater to value-seeking middle and lower-middle income consumers is execellent according to the brokerage.
Avenue Supermarts’ DMart also seems to be the key beneficiary of organised grocery retail, which could help the company consistently grow at 18–22% for many years. This will make the price-to-earnings ratio tenable.
In the bear case, UBS Global Research is estimating a 18–19% CAGR, which leads downside case of Rs 4,400 apiece, the brokerage said. The key downside for the stock is failure to execute network rollout in a timely manner and competition weighing on same-store-sales growth.
UBS Global Research has trimmed earnings-per-share estimates by 2–4% for financial years 2027 and 2028, respectively. Meanwhile, they raised the estimates for network rollout assumption, roll forward valuation, and lift the target price to Rs 5,600 apiece.
