Avenue Supermarts Finally Hits Growth Phase, Says HDFC Securities

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HDFC Securities Report

Avenue Supermarts Ltd. revenue grew 10.1% to Rs 74.3 billion (our estimate Rs 73.3 billion) as footfalls continued to recover from the wrath of Covid-19.

While gross margin expanded to 11/189 basis point YoY/QoQ to 15.1% (our estimate 14.8%), its underpinnings remain weak.

We suspect lower discounting levels in staples (200-400 basis point lower) continue to cushion the adverse margin impact of lower non-essential sales.

Management, too, highlighted that recovery in out-of-home categories remains weak.

Ebitdam expanded 52/256 basis point YoY/QoQ to 9.3%, courtesy strong cost control (our estimate 9%).

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