Brokerage Bernstein has initiated coverage on seven retail and restaurant companies – Avenue Supermarts, Trent, Aditya Birla Fashion & Retail, Jubilant Foodworks, Westlife Foodworld, Devyani International and Sapphire Foods India. The firm has ‘outperform’ ratings on Avenue Supermarts, Trent, Jubilant Foodworks and Devyani and ‘underweight’ on Aditya Birla and Westlife World.
Bernstein said that as the scale of organized retailers continues to grow, unlocking demand beyond the top 40 cities and the top 10% of the Indian middle-class market pyramid currently offers tremendous value creation opportunities.
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“While we are optimistic about both, we prefer retail – its higher share of unorganized players (90% vs 60% for restaurants), more consistent historical performance, higher own-brand portfolio (80% vs 0% for restaurants) and softer . valuation,” analysts at the brokerage said in a note.
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