A customer entering a Migros store sees shelves. A shareholder sees two things behind the same shelves: the money in the till and the lease contract attached to that shelf. As of 31 March 2026, the company operates across 3,812 stores and 2.09 million square meters of sales area; retail carries roughly 97% of gross sales. That is why MGROS does not fit inside the sentence "a supermarket chain." It is a machine that converts the country's food habits into money through supplier invoices, warehouse rhythm, online orders, discount labels, and leased square meters.
At first glance, the brightest line on the balance sheet is net cash. Migros reported a 29.9 billion TL net cash position excluding lease liabilities. The same report says financial debt including TFRS 16 is 36.5 billion TL, meaning the lease contracts of the store network cast a large shadow on the balance sheet. The income statement is not simple either: in the first quarter of 2026, net income attributable to the parent was 1.6 billion TL, while net monetary position gain was 9.1 billion TL.
The Machine Beneath The Discount Label
Revenue in the first quarter of 2026 was 109.2 billion TL; real sales growth under TMS 29 was 6.4%. This growth is not coming from some fairy-tale consumer appetite. The company's own explanation is harder: like-for-like store sales growth, new store openings, competitive pricing, and effective discount campaigns. In food retail, loyalty sometimes belongs to the brand, sometimes to the neighborhood, and most often to the final price on the label.
Scale is still Migros' most real asset. In the first quarter, 51 new stores were opened. The online channel reached 23.5% of sales excluding tobacco and alcoholic beverages. According to Nielsen data, market share was 9.9% in the total FMCG market and 15.2% in the modern FMCG market. These figures mean bargaining power at the supplier table, in the distribution center, and in the customer's basket.
But scale does not work for free. Gross margin fell from 24.2% to 23.6% in one year. The company explains the causes as the interest effect on forward purchases, distribution center personnel expenses, and intense promotional activity. In other words, there is growth; but rent, labor, inventory financing, and the discount label sit on top of that growth.
| Operating evidence | 2026Q1 | Reading |
|---|---|---|
| Real sales growth | 6.4% | Start consistent with full-year target |
| New store openings | 51 stores | First step toward the 180-200 target |
| Online sales share | 23.5% | Digital weight excluding tobacco and alcohol |
| Total FMCG market share | 9.9% | Scale at the supplier table |
| Gross margin | 23.6% | Below 24.2% in 2025Q1 |
The Line Where Profit Comes From
Migros' Q1 income statement is not an easy table to read. EBITDA was 5.29 billion TL, with an EBITDA margin of 4.8%. Net income attributable to the parent was 1.60 billion TL. But the operating result was a 4.67 billion TL loss. The large item keeping net income on its feet is the 9.07 billion TL net monetary position gain.
This does not mean "there is no profit." There was 6.72 billion TL of cash inflow from operating activities. Cash outflow was 2.67 billion TL for purchases of property, plant, equipment and intangible assets, and 2.75 billion TL for lease contracts. Put these three items side by side and the store machine still leaves roughly 1.30 billion TL of cash after capex and lease payments. Cash flow does not fully erase the income statement's doubt; but it also does not allow one to say the company is breathing only through inflation accounting.
| Item | 2026Q1 | Reading |
|---|---|---|
| Net cash excluding leases | TRY 29.9bn | Balance-sheet support |
| Financial debt including IFRS 16 | TRY 36.5bn | Debt image of the leased store network |
| Lease liabilities | TRY 35.7bn | The item that softens the net-cash sentence |
| Lease-payment cash outflow | TRY 2.75bn | Quarterly rent test for the shelves |
Cheapness Tested With Rent Included
Using 18 May 2026 market data, MGROS has a market capitalization of 118.3 billion TL. Equity attributable to the parent is 88.3 billion TL; that is roughly 1.34x price/book. Multiplying Q1 net income attributable to the parent by four gives a crude 18.5x P/E; but this multiple is weak evidence, because the profit includes 9.1 billion TL of monetary gain.
The more honest bridge reads EBITDA, cash, and lease debt together. Once net cash excluding leases is deducted, enterprise value is roughly 88.5 billion TL. Annualized Q1 EBITDA equals 21.2 billion TL; that means 4.2x EV/EBITDA. If the midpoint of the 2026 guidance's 6-7% TMS 29 EBITDA margin is applied to the Q1 sales pace, it implies roughly 28.4 billion TL of EBITDA; with the same clean enterprise value, the multiple falls to 3.1x.
This clean picture deserves particular distrust. Looking excluding leases makes the economic reality of the store network look too polite. When cash and short-term financial investments are deducted from debt including TFRS 16, enterprise value rises to roughly 125.9 billion TL. Then the Q1 annualized EBITDA multiple becomes 6.0x, and the guidance-midpoint EBITDA multiple becomes 4.4x. That is still not expensive. The real sentence is only this: MGROS is cheap, but its cheapness is not a fairy tale stripped of lease contracts; it is a discount story that remains reasonable even when tested with rent included.
| Bridge | Calculation | Result |
|---|---|---|
| Market / book | 118.3 / 88.3 TRY bn | 1.34x |
| Annualized Q1 P/E | 118.3 / (1.60 x 4) | 18.5x |
| Ex-lease EV / Q1 run-rate EBITDA | (118.3 - 29.9) / (5.29 x 4) | 4.2x |
| IFRS 16-included EV / Q1 run-rate EBITDA | (118.3 + 36.5 - 28.9) / (5.29 x 4) | 6.0x |
| Ex-lease EV / guidance midpoint EBITDA | 88.5 / (109.2 x 4 x 6.5%) | 3.1x |
| IFRS 16-included EV / guidance midpoint EBITDA | 125.9 / (109.2 x 4 x 6.5%) | 4.4x |
The market's embedded belief is severe: "This cash may stay, but its quality is not guaranteed; this EBITDA may come, but rent and promotions will eat it." That doubt is fair. Where the price goes too far is in turning that doubt into an EBITDA multiple that remains low even after leases are included.
The Family Table, The Supplier Invoice
The control structure is not a plain free-float story either. The company is controlled by AG Anadolu Grubu Holding; the ultimate control chain extends to a structure based on equal representation and equal management principles between the Yazıcı and Özilhan families. In the capital, MH Perakendecilik holds 49.18%, "Other" shareholders hold 49.18%, and Migros holds 1.64% of its own shares. There are no voting privileges.
This structure is not negative by itself. The corporate governance score is 9.67. But in a food aisle, related-party risk is not an abstract paragraph; it is an invoice. On 31 March 2026, trade payables to related parties were 3.21 billion TL, while trade receivables from related parties were 242 million TL. In related-party purchases, names close to the group ecosystem appear, such as Coca Cola Satış ve Dağıtım and Anadolu Efes Pazarlama. This size is not a risk that would overturn total trade payables; but it does require the shareholder to ask, "who sits at the supplier table?"
The legal and operational surface is not small either. Provisions for lawsuits are 530 million TL; the main cases are receivables, lease, and labor lawsuits. The number of employees is 62,453. The company also says structural control work continues for stores, administrative offices, and distribution centers, and that alternative building and evacuation work has begun for structures that cannot be reinforced. This detail is not literary decoration: in a retailer that works through leased square meters, physical structure risk is directly capital risk.
The Thesis Turned Inside Out
The best argument against MGROS is simple and strong. The company posted an operating loss in Q1. Gross margin declined. Net income was carried by a monetary gain several times larger than net income itself. Lease liabilities soften the "net cash" sentence. If competition hardens and the customer does not respond outside promotions, sales growth may be real while shareholder return remains weak. If the EBITDA margin does not approach the 6-7% target and gets stuck around Q1's 4.8%, the cheapness bridge looks less bright.
I take this anti-thesis seriously. But the market is already pricing it. A 118.3 billion TL market value is not an excessively optimistic price for a retailer with 3,812 stores, declared net cash excluding leases, strong market share, positive operating cash flow, and no retreat from its annual targets. I cannot build a bridge that makes this stock expensive. The decision, without hiding the risks: cheap.
Verdict
MGROS is cheap not because it is risk-free, but because the price carries its risks more heavily than necessary. What one owns is not a postcard of a defensive stock; it is a large retail machine trying to extract cash through food inflation, discount labels, lease contracts, family control, and inflation accounting.
There are three data points to watch. Will the EBITDA margin approach the 6-7% guidance through 2026? Will net cash excluding leases be preserved after capex, dividends, and lease payments? Will online and new stores grow sales while thinning gross margin further? If two of these three deteriorate, the thesis weakens. If all three work together, today's price will have read Migros' till too cheaply and its shelf rent too expensively.
Owning MGROS is not buying a full till; it is waiting for that full till to pass through rented shelves again every quarter.