Street takes grim view of Avenue Supermarts' falling profitability

Anticipation of rise in operating costs and further pressure on margins may drag sentiment around the stock

Despite most analysts having a ‘buy’ rating on the Avenue Supermarts stock, the Street is increasingly turning less optimistic on the retail major. After the recent ‘underperform’ rating initiated by Morgan Stanley and ‘reduce/sector underperformer’ rating of Edelweiss, nearly 60 per cent of analysts tracking the stock have a ‘sell’ rating on it.

In an industry where cost structures are hard to curb and attractive operating margin is elusive, Avenue Supermarts, which operates the DMart chain of supermarkets, found acceptance among investors for its promise not to compromise on both.

Of late with competition heating up from brick-and-mortar and online