CLSA has maintained its high-conviction outperform rating on Avenue Supermarts with a target price of ₹6,300 per share, viewing the company’s near-term performance miss as transitory. The brokerage noted that the retailer’s Q2FY26 results came in below consensus, with revenue up 15.5% year-on-year to ₹16,676 crore, EBITDA rising 11% to ₹1,213.6 crore, and PAT up 2.3% to ₹684.9 crore.
CLSA attributed the sales deceleration to factors such as inclement weather, price deflation in private-label products, and lower sales density from newer stores in emerging geographies. Employee costs surged 33% year-on-year, 16% higher than estimates, accounting for the entire 4.6% EBITDA miss as the company continues to expand its workforce to support faster store additions.
The brokerage said PAT was also impacted by higher finance costs as D-Mart availed short-term bridge loans to accelerate store rollout. However, store additions improved year-on-year, and LFL growth remained at 6.8%. CLSA remains constructive on the company’s medium-term prospects, supported by strong execution, improving supply chain efficiency, and an expanding footprint.
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