Emkay Global Financial's research report on Aditya Vision
AVL’s Q2 EBITDA was 8% higher than our estimate, led by better gross-margin and cost savings. Q2 revenue growth at 20% (10% SSG) was healthy albeit moderated (vs Q1) due to preponement of the Shrad period and some demand temperance. However, outperformance continued vs EMIL, reflecting deep under-penetration in the Hindi Heartland. Addressing concerns around tightening of finance-led sales, AVL highlighted that financing continues to be robust along with new partners entering its area of operations. AVL is encouraged by the initial traction in Uttar Pradesh (7% mix in H1), and plans to cover central UP with 10 more additions by FY25-end. Overall, AVL plans to add ~300 stores annually, to reach a 200 store-count by FY26. Our TP/earnings get cut by 6-8%, on sluggish macros and higher store additions.
Outlook
The stock has corrected ~20%, and continued execution should drive a healthy re-rating. Better liquidity with the stock split/NSE listing is also positive. We maintain BUY on AVL, with revised down TP of Rs550 (40x Sep-26E EPS).
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Aditya Vision - 22112024 - emkay