Avenue Supermarts downgraded to 'Sell' by MarketsMOJO, technical indicators suggest bearish outlook.

Avenue Supermarts, a largecap company in the retailing industry, has recently been downgraded to a 'Sell' by MarketsMOJO on November 5, 2024. This decision was based on several factors, including flat results in September 2024, a low ROCE (return on capital employed) of 17.89%, and a low cash and cash equivalents amount of Rs 305.00 crore.
Technically, the stock is currently in a mildly bearish range and the technical trend has deteriorated from mildly bullish on November 5, 2024. Multiple indicators such as MACD, Bollinger Band, and KST also suggest a bearish outlook for the stock.

In terms of valuation, Avenue Supermarts has a high ROE (return on equity) of 13.3, making it a very expensive stock with a price to book value of 12.7. However, it is currently trading at a fair value compared to its historical valuations. In the past year, the stock has generated a return of 7.67%, while its profits have only risen by 15.2%, resulting in a high PEG (price/earnings to growth) ratio of 6.2.

Furthermore, Avenue Supermarts has underperformed the market in the last year, with a return of only 7.67% compared to the market's return of 32.67% (BSE 500). The company also has a low debt to equity ratio of 0.02, indicating a healthy financial position.

On a positive note, Avenue Supermarts has shown strong long-term growth with an annual growth rate of 19.66% in net sales and 20.53% in operating profit. The majority of the company's shares are held by promoters, indicating their confidence in the company's future.

With a market cap of Rs 2,57,040 crore, Avenue Supermarts is the largest company in the retailing sector, constituting 38.77% of the entire sector. Its annual sales of Rs 54,812.66 crore also make up 46.17% of the industry. While the company has faced some challenges in the recent past, it still holds a strong position in the market and has the potential for future growth.