"We forecast it to turn free cash flow positive in FY24," Morgan Stanley said.
Shares of hypermarkets retail chain D-Mart operator, Avenue Supermarts, rallied 2.8 percent intraday on June 24 as Morgan Stanley expects strong revenue CAGR going ahead given the likely aggressive strategy.
While having an overweight call on the stock with a target of Rs 2,758 (implying 16.9 percent potential upside from current levels), the global brokerage house expects store count to rise 3.7 times over the next 10 years.
Morgan Stanley sees a revenue compounded annual growth rate (CAGR) of 21 percent over next 10 years and believes the company will become more aggressive on store additions from FY22.
"We forecast it to turn free cash flow positive in FY24," the brokerage said.
The stock rallied 82 percent in last one year period, and surged 34 percent in last three months from its March lows. It was trading at Rs 2,386.15, up Rs 27.25, or 1.16 percent, on the BSE at 10:39 hours IST.
Angel Broking has a buy call on the stock with a target of Rs 2,735 (implying 15.9 percent potential upside from current levels).
"Focused on value retailing, it offers a wide range of fast-moving consumer (food and non-food) products, general merchandise and apparel. We expect D-Mart to report consolidated revenue/PAT CAGR of 18/26 percent, respectively over FY2019-22E," the brokerage reasoned.
Last month, the D-Mart operator reported a 41.6 percent year-on-year growth in Q4FY20 consolidated profit at Rs 271.29 crore and 23.6 percent rise in revenue at Rs 6,255.93 crore compared to same period last year.
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