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Motilal Oswal Report
Motilal Oswal has reiterated a ‘Buy' rating on Avenue Supermarts Ltd. and raised its target price to Rs 5,200 from Rs 5,000, implying an upside of around 13%, driven by improved earnings visibility and strong store expansion.
DMart's store additions ramped up to 85 in FY26. Sustained acceleration in store additions remains the key growth trigger for DMart, in the brokerage's view and builds in 85/90 store additions in FY27/FY28.
While the competitive intensity from quick commerce could remain high in the near-to-medium term, Motilal Oswal believes DMart's value-focused model and superior store economics would ensure its competitiveness and customer relevance over the long run, especially in tier 2+ towns.
The brokerage's FY27-28E Ebitda is broadly unchanged; however, it has raised FY27-28E PAT by ~3-7%, driven by a lower-than-expected increase in finance costs/depreciation.
Motilal Oswal builds in a CAGR of 19%/20%/19% in DMart's consolidated revenue/Ebitda/PAT over FY26-28E, driven by 16% CAGR in area additions and high-single-digit LFL growth.
Motilal Oswal assigns a ~45x FY28 EV/Ebitda multiple (implying ~81x FY28 P/E) to arrive at revised target price of Rs 5,200 (earlier Rs 5,000). Motilal Oswal reiterates Buy on DMart.
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