On Wednesday, Avenue Supermarts, operating under the brand DMART, maintained its Outperform stock rating by brokerage firm CLSA, with a steady price target of INR5,535.00.
The retailer reported a 1QFY25 sales increase of 18.4%, with revenues reaching Rs13.7 billion. Despite this growth, the figure fell short of CLSA's projections by 5%. The total number of stores for the quarter stood at 371, which was slightly under the expected 373.
The company's growth in private label products, which are priced considerably lower than competing brands, was highlighted as a potential factor influencing the lower-than-anticipated sales growth.
CLSA pointed out that while the first-quarter sales did not meet expectations, particularly after an increase in store additions in the fourth quarter of the previous fiscal year, the firm's outlook remains positive.
CLSA has expressed confidence in Avenue Supermarts' ability to sustain the lowest prices for consumers through effective cost and inventory management. This strategy is seen as a key driver for DMART to continue expanding its market share. The Outperform rating indicates that CLSA believes the stock will perform better than the overall market or its sector in the coming months.
The report acknowledges the disappointment in the first-quarter sales miss but underscores the company's potential for market share gains. CLSA's unchanged price target of INR5,535 suggests that the firm sees a continued upward trajectory for Avenue Supermarts' stock, based on its operational strengths and market positioning.
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