Bernstein initiates coverage on retail and restaurant stocks

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’ rating on Avenue Supermarts, Trent, Jubilant FoodWorks and Devyani and ‘underweight’ on Aditya Birla and Westlife World.

Bernstein said that as organised retailers scale up, tremendous value creation opportunities can be accessed currently by unlocking demand beyond the top 40 cities and the top 10% of the pyramid of the Indian middle-class market.

“While we are optimistic about both, we prefer retail — given its higher share of unorganised players (90% vs 60% for restaurants), more consistent historical performance, higher own-brand portfolio (80% vs 0% for restaurants) and softer valuations,” said the brokerage’s analysts in a note.