Avenue Supermarts Ltd. | Asia Pacific Risk Reward Update

Research evidence excerpt

Avenue Supermarts Ltd. | Asia Pacific Risk Reward Update

UpdateM

RiskRisk RewardReward– Avenue- AvenueSupermarts Ltd.Supermarts(AVEU.NS) Ltd. (AVEU.NS)

The juggernaut is rolling

PRICE TARGET Rs4,464.00 OVERWEIGHT THESIS

Residual income model, probability-weighted 25% bull, 60% base, 15% bear. The bear-case ▪We remain bullish on the long-term

weighting reflects risks to growth from the scale-up of new age channels such as e- opportunity given

commerce and quick commerce; while the bull case weighting reflects the long-term industry the substantial addressable market for

opportunity. Key assumptions: grocery and DMart's business model

CoE 11.8% across scenarios strengths.

Terminal growth rate 6.0% base, 6.3% bull, 5.8% bear ▪We believe DMart's growth slowdown was

self-inflicted - its pace of store expansion Rs4,350.77

had not kept pace with the revenue scale of

Consensus Price Target Distribution Rs3,250.00 Rs5,723.00 the company. The sharp acceleration in the MS PT

pace of store expansion in F2026 increasesSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

our confidence in DMart's revenue growth

delivery in F2027.

▪Overall, we expect DMart's revenue

RISK REWARD CHART growth to improve to 17-18% in F2027-29

(~16% in F2026) led by faster store

expansion and improving SSSG trends.

INR ▪We view DMart as a defensive play in the

discretionary space in an inflationary

Rs7,185.00Rs7,185.00(+86.79%)Rs7,185.00(+86.79%)(+86.79%) environment. 8000

Consensus Rating Distribution

32% Overweight

Rs4,464.00Rs4,464.00(+16.05%)Rs4,464.00(+16.05%)(+16.05%) 42% Equal-weight

4000 Rs3,846.60Rs3,846.60Rs3,846.60

26% Underweight

MS Rating

2000 Source: Refinitiv, Morgan Stanley Research

Rs2,110.00Rs2,110.00(-45.15%)Rs2,110.00(-45.15%)(-45.15%)

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