We use a discounted cash flows (DCF) model as our primary valuation methodology, which results in a fair value/share on September-27E of Rs3,250 based on WACC = 9.8% and g = 5%. Our target price implies 61x/55x FY27E/September-27E EPS. Avenue Supermarts' multiples are ahead of regional and global peers; technical factors aside, the higher absolute multiples may be unwarranted, in our view, given risks of revenue/earnings disappointments, the business return ratio, and FCF profile.
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