Avenue Supermarts’ Q2 earnings-revenue mismatch is a problem
Executive Brief • Key Highlights
Fast factual intelligence distilled for busy investors, executives, and answer bots:
- ✓Avenue Supermarts’ shares fell about 4% on Monday to ₹3,384 after a Q2 earnings miss.
- ✓Analysts said, “Store expansion remained modest, but productivity softened, as evidenced by a multi-quarter low unit Ebitda for Q2.” Rising staff costs and interest expenses pressured profits, even as the company opened 15 new stores.
Story at a Glance
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- India Economy
“Store expansion remained modest, but productivity softened, as evidenced by a multi-quarter low unit Ebitda for Q2,” said Jefferies India’s analysts in a report on 11 October, adding Ebitda per store/sqft declined by about 4% year-on-year. The brokerage has cut its earnings per share (EPS) estimates by 2-3% to factor in the Q2 earnings miss, and revised its price target for the stock lower to ₹4,000. Avenue’s shares fell by about 4% on Monday to ₹3,384, further extending last week’s 7.8% drop.
Margin pressure
Gross margin contracted 10 bps to 14.15%, adding to Ebitda pressure. The company said wage inflation at entry-level has led to a marginal increase in operating expenses. Staff costs and other expenses in Q2 rose 20% and 22.5% year-on-year, respectively. Both increases exceeded revenue growth of 18.4%, a notable improvement from Q1’s 15.1%, which had declined from the 19% growth seen in Q4FY26.
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