Avenue Supermarts (AVEU.NS): 1QFY27 Update: Pantry-Fill Reversal Weighs on SSG; Margins Risk Ahead; Reiterate Sell

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Avenue Supermarts (AVEU.NS): 1QFY27 Update: Pantry-Fill Reversal Weighs on SSG; Margins Risk Ahead; Reiterate Sell

Avenue Supermarts (AVEU.NS)

02 July 2026 Citi Research

Avenue Supermarts

Valuation

We use a discounted cash flows (DCF) model as our primary valuation methodology, which results in a fair value/share on Mar-

28E of Rs3,650 based on WACC = 9.8% and g = 5%. Our target price implies 54x Mar-28E EPS. Avenue Supermarts’ multiples

are ahead of regional and global peers; technical factors aside, the higher absolute multiples may be unwarranted, in our view,

given risks of revenue/earnings disappointments, the business return ratio, and FCF profile.

Risks

Key upside risks that could sustain the stock above our target price include: a) stronger SSSG or revenue per store metrics owing

to either successful implementation of Pharmacy SIS, lower competitive intensity or superior offerings by Avenue Supermarts

resulting in accelerated market share gains; b) successful transition to the leased model or very attractive land deals could aid

faster store growth; c) better traction in Avenue e-Commerce and a faster turnaround could be viewed positively; and d) entry

into index or other technical factors can support the stock performance.

Key downside risks that could cause the stock to trade below our target price include: a) further increase in competitive intensity

from quick commerce players leading to adverse impact on SSG and/or margins; b) adverse trends in business mix going

forward; c) inability to sustain infrastructure and quality of manpower required to keep pace with the expansion strategy; d)

significantly higher investments or losses on its e-commerce offering; and e) other factors linked to the stock’s liquidity and free

float.