Avenue Supermarts Q3 Review - Positive Surprise; Net Margins Above Pre-Covid-19: IDBI Capital
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IDBI Capital Report
Avenue Supermarts Ltd.'s Q3 FY22 results has been above our estimates. Revenue growth (at 18% two year compound annual growth rate) is healthy. However, we expect this ratio to be 25% plus post normalisation of social distancing norms.
Slow pick up in margin-accretive general merchandise and apparel business (versus staples) is a cause for temporary concern from business economics perspective. D-Mart's store addition rate remain healthy (29 stores year-to-date).
Positive to note that net margins are above pre-Covid-19 levels now. We have upgraded our store addition estimates in FY23E to 33 stores.
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