Improving signals for Avenue Supermarts with strong Ebitda, PBT growth

Consensus target price of analysts indicates limited upside; rebound in general merchandise and apparels crucial for margin gains

Avenue Supermarts, the operator of DMart retail chain, reported good results for the July-Septe­mber quarter (Q2FY24) with strong earnings before interest before interest, taxes and depre­ciation (Ebitda) and profit before tax (PBT) growth, but lower PAT due to higher tax incidence.
 

The operating margin improved, and like-to-like store sales growth was strong. Average bill value also increased though this may be a seasonal effect to some extent. Analysts are assuming this means the slowdown in retail may have bottomed out.
 

Although the apparel division may not be fast-growth, food and groceries could drive a rebound in demand. Earnings growth is