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ICICI Securities Report
Avenue Supermarts Ltd.'s Q1 revenue performance was decent in the context of strict operating restrictions.
However, a ~130 basis points YoY decline in gross margin was concerning given sales mix would have been largely comparable (weak general merchandise); Ebitda margin expansion was led by operating leverage.
In FY22 and beyond, we believe, it will benefit from:
the (consumer) relevance of value for money positioning, which, in our view, may potentially be a stronger competitive advantage in FY22-23E and
price-led operating leverage (beneficiary of inflation in staples, fast moving consumer goods).
Recovery in general merchandise and apparel should also be swift (as seen last year as well).
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