Avenue Supermarts, the parent company of retail chain DMart, delivered strong third-quarter financial results, showcasing robust operational performance despite some moderation in growth metrics. The company's financial performance reflects its resilient business model in a competitive retail environment.

Financial Performance Highlights

The company's Q3 results demonstrated solid growth across key financial metrics:

The company's EBITDA growth of 20.2% outpaced revenue growth, indicating improved operational efficiency. Margins expanded to 8.1% from 7.6% in the previous year, reflecting better cost management and operational leverage.

Operational Metrics Show Mixed Trends

While financial metrics remained strong, certain operational indicators showed moderation. Like-for-like sales growth slowed to 5.6% compared to 8.3% in the year-ago period, representing the slowest growth in five quarters. The company also reported the highest total bill cuts in five quarters during this period.

On a positive note, Avenue Supermarts reported sequential improvement in sales per square feet, indicating better space utilization and productivity at store level.

Analyst Outlook and Target Prices

CLSA analyst Aditya Soman maintains confidence in Avenue Supermarts' business model, believing the company's low-cost operator model remains robust. The analyst suggests that concerns about competition from quick commerce platforms may be overdone. CLSA has assigned a 'High-Conviction Outperform' rating to the stock.

The brokerage has revised its 12-month target price to ₹6,105 from ₹6,300, which still implies a substantial 63% upside from the stock's Friday closing price of ₹3,745.10.

Broader Analyst Consensus

Analyst sentiment on Avenue Supermarts remains mixed but generally positive. According to Bloomberg data, out of analysts tracking the company:

• Nine analysts maintain a 'buy' rating
• Twelve recommend a 'hold'
• Eight suggest 'sell'

The average 12-month consensus price target stands at ₹4,144, implying a 9% upside from current levels. This more conservative consensus target reflects varied opinions about the company's growth prospects amid evolving retail dynamics.

Avenue Supermarts has delivered a strong financial performance in Q2, showcasing robust growth across key financial metrics. The company demonstrated solid operational efficiency with significant improvements in profitability and revenue generation compared to the same quarter in the previous year.

Financial Performance Overview

The company's financial results reflect strong business momentum with consistent growth across all major parameters. Avenue Supermarts achieved notable improvements in both top-line and bottom-line performance during the quarter.

Revenue and Profitability Growth

The company's revenue performance showed strong momentum, reaching ₹176.00 billion compared to ₹155.60 billion in the corresponding quarter of the previous year. This represents a healthy year-on-year growth of 13.1%, indicating robust business expansion and market penetration.

Net profit demonstrated even stronger growth trajectory, increasing by 17.6% to ₹9.23 billion from ₹7.85 billion in the same period last year. This outpaced revenue growth, highlighting improved operational efficiency and cost management.

Operational Efficiency Metrics

Avenue Supermarts showed enhanced operational efficiency with EBITDA growing to ₹14.81 billion from ₹12.35 billion, representing a substantial increase of 19.9%. The EBITDA margin also improved to 8.41% compared to 7.94% in the previous year, indicating better cost optimization and operational leverage.

The margin expansion of 47 basis points demonstrates the company's ability to maintain pricing power while managing operational costs effectively. This improvement in profitability metrics reflects strong business fundamentals and efficient resource utilization during the quarter.