Avenue Supermarts Q1 Review - Gross Margin Disappoints Amid A Steady Revenue Recovery: Motilal Oswal
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Motilal Oswal Report
The revenue recovery in Avenue Supermarts Ltd. has been much better than that during the previous lockdown, growing 33% YoY (13% below pre-Covid-19 levels).
Gross margin declined by 110 basis point YoY, despite the base quarter having seen a severe impact on the margin accretive discretionary category due to Covid-19.
We have largely maintained our estimates and expect a buoyant recovery from Q2 FY22 onwards, factoring in 24% revenue/profit after tax compound annual growth rate over FY20-23E.
We see a limited upside given the rich valuations.
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