The broking firm Jefferies said Avenue Supermart’s store addition and mix remained low for many quarters, “worst” is still yet to come. The brokerage house has kept the rating unchanged at Hold on the stock. It has a price target of Rs 4,200 on the stock, an upside of 9%.
Jefferies said that the company’s third-quarter operating margin was below its estimates due to lower gross margin and marginally higher costs. According to the brokerage house, “Festive season sales of high-margin GM&A was softer, and weighed on GM.”
However, signs of recovery are there as “the release shows that the mix has stabilised and trends are encouraging post-Diwali.” But, the company’s management highlighted that the Diwali sales were lower for non-FMCG this year.
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The brokerage said the stock of the company to stay range-bound until there are signs of visible growth pickup.
The brokerage expects the company’s revenue to grow 17% between FY23 to FY26.
Another broking firm JM Financial said that the company’s performance was in line with the expectations “after having built in the growth disappointment laid out in the revenue update provided by the company earlier.”
The brokerage expects the company’s revenue traction will not stay low forever. JM Financial remains “positive” on the company as “businesses with such long growth runways are rare.” It has a price target of Rs 4,505 on the stock, with a ‘Buy’ rating.