Avenue Supermart growth rate is superior to that of consumer companies. These companies like Hindustan Unilever and Nestle have double the market capitalisation of Avenue Supermarts. Even the consumer companies are nowhere near Avenue’s growth rate.
3-year average growth of sales for Hindustan Unilever is 7% and Nestle is flat, the average 3-year sales growth of Avenue Supermarts is 37%. Thus, while the P/E of Avenue Supermarts seems high, its growth compared to the well established players in the sector, is in a league apart. It could even be among the top five fastest-growing large companies in India.
If Avenue is overvalued then what about its struggling competitors. Just imagine how much profit it will earn if it will have 500-1000 stores. Walmart has 4100 stores. But Big Bazar has 260 stores only.