The company’s quarterly store additions are higher than in the year-ago quarter, but overall first-half (H1FY27) additions are similar to levels seen in the year-ago period. Going ahead, in addition to the pace of store additions, the same-store sales growth (SSSG) trend will also be watched, given that the company had hit a multi-quarter low in the first quarter (April-June/Q1) of FY27 on this metric. At the current price, the stock, which has lost about 20 per cent over the past six months, is trading at 61x its 2027-28 (FY28) estimated earnings.
The company’s revenue growth in Q2FY27, at 18.4 per cent year-on-year (Y-o-Y), was better than estimates. Growth was better than the 15.1 per cent reported in Q1FY27 and the 15.4 per cent registered in Q2 of 2025-26 (FY26). However, most brokerages point out that the acceleration was likely on account of price hikes in fast-moving consumer goods and general inflation in other categories, coupled with lower discounting intensity from quick-commerce (qcom) players. Goldman Sachs highlights that the company’s revenue growth has been volatile in recent quarters, ranging between 13 per cent and 19 per cent in the past four quarters.
The company’s SSSG has been inconsistent and on a declining trend. Except for the fourth quarter (January-March/Q4) of FY26, when it posted 10.8 per cent growth, the metric has been declining in the past few years as well as over the past four quarters. After reporting 5.5 per cent growth in Q1FY27, brokerages expect Q2FY27 growth to be in the mid- to high-single digits.
Analysts led by Arnab Mitra of Goldman Sachs Research expect Avenue’s revenue growth to moderate to below 20 per cent going forward, versus 30 per cent earlier. The company is seeing moderation in SSSG due to rising competition from qcom players such as Blinkit (Eternal) and Swiggy, as well as larger players such as Reliance. They expect competitive intensity to continue to rise in large cities, putting pressure on Avenue’s SSSG. The brokerage has a ‘sell’ rating with a target price of ~3,800, and its investment thesis is based on the mismatch between Avenue’s growth and valuations.
The company added 15 stores in Q2, taking the total store count to 518. This is 20 per cent higher Y-o-Y and 3 per cent higher sequentially. While the addition of 15 stores in Q2FY27 optically suggests an acceleration versus eight stores in the base quarter, analyst Ashish Kanodia of Citi Research says that the addition of 18 stores in H1FY27 was broadly comparable with the 17 stores added in H1FY26. Brokerages expect the company to add 75 stores in FY27, registering 15 per cent growth for the full year.
Citi Research believes that, along with SSSG, store expansion in FY27 will be key, given the high base of FY26 (85 stores versus 50/41 in 2024-25/2023-24). The brokerage remains cautious on Avenue, given its expensive valuation (61x FY28 price-to-earnings estimates) and risks to SSSG and earnings from rising qcom competition. Sustained accelerated store expansion and improved throughput will be key to supporting valuation multiples, it adds. Citi has a ‘sell’ rating on the stock with a target price of ~3,300.
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