Brokerages maintained their bullish stance on Avenue Supermarts after the company reported in-line results for the June quarter.

What Happened: The parent company of DMart reported a net profit of ₹773.8 crore, an increase of 17.5% from the previous year. Its revenue jumped 18.6% to ₹14,069.1 crore.

The strong show was attributed to improving gross margins and general merchandise and apparel (GM&A) contribution. However, the company also saw rising costs due to increasing investments to raise service levels and build capacity.

Brokerage Views: BofA maintained a "buy" call with a target price of ₹5,465. The business momentum is likely to remain healthy, the brokerage said. The research firm also noted efforts by the company to widen store footprints from the core states of Maharashtra and Gujarat to other markets.   

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Motilal Oswal also reiterated "buy" call with a target price of ₹5,500. It maintained its FY25 and FY26 growth estimates at a compound annual growth rate of 22% and 31% for revenue and profit, respectively. This will be likely be aided by 11% and 9% growth in footprints and revenue productivity, respectively.

The supermarket chain’s revenue per square foot grew 4.2% while revenue per store shot up 4.7%, closing the gap between the two metrics and showing an improvement in the share of large format stores. 

Nuvama maintained "hold" call and increased the target price to ₹5,091 viewing a slight improvement in store productivity. Though the revenue per square foot grew 4% its still less than the pre-pandemic average, the research firm said.

The company opened six stores in the quarter and the brokerage sees it open 45 stores for FY25 as the company usually bunches store openings in later half of the year. 

Price Action: Shares of Avenue Supermarts was up 0.13% to 4,950.10 on Monday morning. 

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