CLSA ultra bullish on this retail stock; continues to upgrade target price for third time in a row

Shares of Avenue Supermarts in Tuesday’s session (April 2, 2024) were trading higher by over 1 per cent at Rs 4531.1 as Hong Kong-based global brokerage CLSA has yet again raised the target on the retail stock, while maintaining a ‘buy’ view.

The price upgrade has been initiated in less than a week to Rs 5514 from the earlier target of Rs 5307, implying potential gains to the tune of over 23 per cent from the previous close.

At the day's high, the stock scaled to Rs 4560.75, a gain of 1.8 per cent from the previous close. 

The brokerage is upbeat on the counter after store additions at the supermarket chain operator during the quarter ended March 2024 scaled to an all-time high at 21 stores.

Earlier in its exchange filing dated March 31, 2024, the company informed that it has opened 3 new stores, one each in Pune, Bengaluru and Nashik. Also, it said that its total store as on date stands at 365.

CLSA maintains that acceleration in store addition at Avenue Supermarts should allay some of the investor concerns. Also, store addition at the retail entity will bolster mix as well as gross margins at the company.

The global brokerage sees the focus to shift to quarterly sales release by the company.

In the previous trading session (April 1, 2024), the stock logged its fresh 52-week high of Rs 4590 for the third day in a row.

CLSA on the previous target price upgrade said that the increasing palm oil and crude oil price should offer the retail company some room for pricing going forward in the upcoming fiscal year 2025.

Macquarie is also bullish on Avenue Supermarts and has maintained its ‘outperform’ view, with the target raised to Rs 4,500 from the previous Rs 4,350. Last month, ICICI Securities said it prefers 'DMart' over 'Nestle' as the company's valuation is turning palatable.

Also read: CLSA super bullish on this retail stock; raise target further

The stock of Avenue Supermarts over the last month has gained by over 16 per cent, while its 1-year return is at 33 per cent.

DMart operator- Avenue Supermarts is a large cap company with a market cap of Rs 2,94,606 crore.  The supermarket chain under one roof offers its customers an array of personal and home products.