Current Rating and Its Significance
The 'Sell' rating assigned to Avenue Supermarts Ltd indicates a cautious stance for investors considering this stock at present. This recommendation suggests that the stock may underperform relative to the broader market or its sector peers in the near term. Investors should carefully weigh the risks and fundamentals before committing capital. The rating is derived from a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals.
Quality Assessment
As of 28 December 2025, Avenue Supermarts maintains a good quality grade. This reflects the company’s solid operational foundation and consistent business model within the diversified retail sector. Despite some recent challenges, the firm continues to generate stable returns on capital employed (ROCE) and return on equity (ROE), which are important indicators of management efficiency and profitability. The half-year ROCE stands at 15.59%, while the ROE is 11.9%, signalling reasonable but not exceptional capital utilisation.
Valuation Considerations
The stock is currently classified as expensive based on valuation metrics. Avenue Supermarts trades at a price-to-book (P/B) ratio of 10.8, which is high relative to typical market averages and indicates that investors are paying a premium for the stock. While the valuation is in line with historical peer averages, the elevated P/B ratio suggests limited upside potential unless earnings growth accelerates. The price-to-earnings-growth (PEG) ratio is notably elevated at 53.5, reflecting a disconnect between price and earnings growth, which may deter value-focused investors.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend Analysis
The financial trend for Avenue Supermarts is currently flat. The latest data as of 28 December 2025 reveals subdued growth in key financial metrics. Operating cash flow for the year is at its lowest level in recent periods, recorded at ₹2,462.97 crores. Similarly, cash and cash equivalents have declined to ₹209.85 crores, signalling tighter liquidity. Profit growth has been modest, with a 1.7% increase over the past year, which is insufficient to justify the stock’s premium valuation. These factors contribute to a cautious outlook on the company’s near-term financial trajectory.
Technical Outlook
From a technical perspective, Avenue Supermarts is rated bearish. The stock has experienced a downward trend over recent months, with a 3-month decline of 16.15% and a 1-month drop of 5.73%. Even though the year-to-date return remains positive at 6.37%, the short- and medium-term technical indicators suggest selling pressure. The one-day change on 28 December 2025 was -0.31%, reflecting continued volatility. This bearish technical grade signals that momentum is currently against the stock, which may influence investor sentiment negatively.
Stock Returns and Market Performance
As of 28 December 2025, Avenue Supermarts has delivered a 7.92% return over the past year. While this is a positive absolute return, it is relatively modest compared to broader market indices and some sector peers. The stock’s performance over shorter intervals has been weaker, with losses of 0.84% over one week and 12.09% over six months. These figures underscore the challenges the company faces in sustaining growth momentum amid a competitive retail environment and changing consumer dynamics.
Investor Implications
The current 'Sell' rating advises investors to approach Avenue Supermarts with caution. The combination of an expensive valuation, flat financial trends, and bearish technical signals suggests limited upside potential in the near term. While the company’s quality remains good, the risk-reward balance does not favour accumulation at current levels. Investors seeking growth or value opportunities may find better prospects elsewhere in the diversified retail sector or broader market.
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Summary
In summary, Avenue Supermarts Ltd’s current 'Sell' rating by MarketsMOJO reflects a comprehensive evaluation of its present fundamentals and market position as of 28 December 2025. The company’s good quality is offset by expensive valuation, flat financial trends, and bearish technical indicators. Investors should consider these factors carefully when making portfolio decisions, recognising that the stock may face headwinds in the near term despite its established market presence.
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