CLSA has upped its target price for Avenue Supermarts Ltd to Rs 5,514 from Rs 5,307, maintaining its “buy” recommendation, following the supermarket chain’s record-breaking quarterly store expansions.
The revised target price, marking a 23 percent surge over the stock’s April 1 closing price of Rs 4,484, reflects the second upward adjustment in a week.
Initiating coverage on March 21 with a “buy” call, CLSA highlighted growth prospects in untapped markets, triggering over a 7 percent surge since then. Over six months, the stock has soared by 20 percent.
According to CLSA, Avenue Supermarts added 21 stores in the March quarter, bringing the total count to 365 as of March 31, as per an exchange filing. This accelerated pace of store additions is anticipated to alleviate investor concerns and bolster product mix, thereby enhancing gross margin.
Investor attention is expected to shift towards quarterly sales data, notes CLSA.
Last week, CLSA raised Avenue Supermarts’ target price to Rs 5,307 from Rs 5,107, attributing it to the company’s aggressive expansion endeavors.
Prior to closing the week ending March 31 with losses, the stock had witnessed six consecutive weeks of gains.
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