For 4QFY2020, Avenue Supermarts Ltd (ASL) posted mixed results. On the top-line
front result was in-line, however EBITDA was below our estimates. Consolidated
revenue grew by ~24% yoy; reported operating margins contracted by 68bps yoy. On the bottom-line front, ASL reported PAT growth of ~42% yoy due to lower taxes.

We forecast ASL to report healthy top-line CAGR of ~19%
to `33,730cr over FY2019-21E on the back of strong store addition every year and
higher footfall as ASL offers significant discount compared to e-commerce, Modern
trade & General trade. On the bottom-line front (reported PAT), we estimate ~26%
CAGR to `1,825cr due to strong revenue and gradual improvement in operating
margin. Thus, we maintain BUY on the stock with Target Price of `2,564.

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