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Avenue Supermarts

News: Ease in Covid-19 related restrictions and strong festive demand resulted in swift revenue recovery for Avenue Supermarts (D-Mart) in Q3FY22. Avenue Supermarts in its press release reported topline growth of 22% YoY ( QoQ 18%) to Rs.9065 crore. Store addition trajectory accelerated materially during the quarter as it added 17 new stores (29 in YTDFY22) taking the total store count to 263 D-Mart outlets. As per our calculations, revenue/store was at ~ Rs.35 crore vs Rs.34 crore in Q3FY20 (~ 100% of pre-Covid levels).

Views: The revenue recovery in Q3FY22 has been sharp compared to the first Covid-19 wave in FY21. We believe that a strong festive season has aided the growth. Also, likely recovery in discretionary product portfolio (non-FMCG) is expected to aid margins during the quarter. The company’s store addition has been strong with 29 new stores added YTD which is in line with its target of opening ~ 40 stores in FY22E. Continued pace of store addition would accelerate the revenue growth going forward. We continue to remain structurally positive on the stock.

Impact: Positive