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Avenue Supermarts Q3 Review - Accumulate In Third Covid-19 Wave Uncertainty: Prabhudas Lilladher

Avenue Supermarts Q3 Review - Accumulate In Third Covid-19 Wave Uncertainty: Prabhudas Lilladher

A shopper browses woman’s clothing at a D-Mart supermarket operated by Avenue Supermarts Ltd. in Thane, Maharashtra, India (Photographer Dhiraj Singh/Bloomberg)
A shopper browses woman’s clothing at a D-Mart supermarket operated by Avenue Supermarts Ltd. in Thane, Maharashtra, India (Photographer Dhiraj Singh/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Prabhudas Lilladher Report

We remain optimistic on Avenue Supermarts Ltd. post Q3 results as it has reported strong growth despite higher inflation and lower mobility impacting sales of non-essentials like apparel and general merchandise (440 basis points decline in sales share to 22.9% in FY21 also).

Q3 margin expansion of 26 bps led by cost control shows the robust business model despite deterioration in sales mix and operating cost of 17 new stores opened in Q3 (other expenses up 15.2% YoY and 12.6% QoQ versus just 5.9% increase YoY in H1 FY22). With third Covid-19 wave coming in full fury, we expect near term uncertainty and increased share of essentials in sales mix.

We are increasing store openings in FY22 to 40 (35 earlier) even as we factor in slight moderation in margins even as high inflation will give some sourcing benefits to D-Mart.

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Prabhudas Lilladher Avenue Supermarts Q3FY22 Result Review.pdf

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