Dmart Q1FY25 Results Showcase Robust Growth and Strategic Expansion
Q1FY25 Financial Performance
Avenue Supermarts demonstrated robust financial performance in Q1 FY2025, as its operational revenue surged by 18.57%, reaching Rs 14,069.14 crore. The notable revenue growth reflects Avenue Supermarts’ robust market presence and successful implementation of its business approach. This upward trend highlights the company’s ability to capitalize on market opportunities and execute its strategies effectively.
Profitability metrics showed notable improvement, with profit before tax rising by 17.48% to Rs 1,054.13 crore in Q1 FY25, up from Rs 897.26 crore in the same period last year. This growth in profitability reflects the company’s operational efficiency and cost management strategies.
EBITDA performance was particularly strong, increasing by 17.97% to Rs 1,221 crore in Q1 FY25, compared to Rs 1,035 crore in Q1 FY24. The EBITDA margin remained steady at 8.7%, demonstrating the company’s ability to maintain profitability levels despite challenging market conditions.
Operational highlights revealed strategic expansion and growth. Avenue Supermarts added 6 new stores during the quarter, bringing its total store count to 371 as of June 30, 2024. This expansion strategy aligns with the company’s focus on increasing market presence and accessibility for customers.
The company’s standalone performance was equally impressive, with net profit jumping 16.83% to Rs 812.45 crore in Q1 FY25. Standalone revenue from operations also experienced a notable growth of 18.36%, reaching Rs 13,711.87 crore.
Avenue Supermarts’ commitment to its EDLC-EDLP strategy continues to drive its success, enabling the company to offer competitive prices while maintaining profitability. This approach has proven effective in attracting and retaining customers in a competitive retail landscape.
Management’s perspective highlighted key growth drivers. CEO & Managing Director Neville Noronha emphasized the improved contribution from general merchandise and apparel, which positively impacted gross margins. He also noted increased operating costs due to ongoing efforts to enhance service levels and build future capabilities.
Consolidated Financial Highlights: (Figures in Rs. Crs)
Particulars | Q1 FY24 | Q1 FY25 | FY24 |
Sales | 11865 | 14069 | 12727 |
Expenses | 10830 | 12848 | 11783 |
Operating Profit | 1035 | 1221 | 944 |
OPM % | 9% | 9% | 7% |
Other Income | 39 | 42 | 38 |
Interest | 15 | 16 | 13 |
Depreciation | 162 | 193 | 205 |
Profit Before Tax | 897 | 1054 | 763 |
Tax | 27% | 27% | 26% |
Net Profit | 659 | 774 | 563 |
EPS in Rs | 10.12 | 11.89 | 8.66 |
The company’s performance in Q1 FY25 positions it well for continued growth, with its expansion strategy and focus on operational efficiency expected to drive further success in the coming quarters. Avenue Supermarts’ ability to maintain strong growth in revenue and profitability demonstrates its resilience and adaptability in the dynamic retail sector.
Industry Overview
Avenue Supermarts Limited’s DMart has become a significant player in India’s affordable retail sector. The company began with humble origins in Mumbai at the start of the millennium and has since experienced impressive growth and expansion across the country. DMart’s rise in the budget retail landscape has positioned it as a formidable competitor in the market. Starting modestly in Mumbai in 2002, the company has undergone remarkable expansion over the years. It currently manages a vast array of 365 stores across a dozen states and territories in India. This impressive growth is reflected in DMart’s extensive retail footprint, which now covers 15.15 million square feet. Such widespread presence underscores the company’s effective growth tactics and its strong position in the marketplace. The company’s growth strategy centers on providing customers with quality products at competitive prices, adhering to the Everyday Low Cost/Everyday Low Price (EDLC/EDLP) model. DMart stores offer a diverse range of products, focusing on Foods, Non-Foods (FMCG), and General Merchandise & Apparel categories. The shopping experience is designed to combine the convenience of everyday value retail with the ambiance of a modern, large-scale mall. DMart’s success can be attributed to its focus on meeting customers’ daily shopping needs in a single location, coupled with competitive pricing. This pricing strategy is supported by the company’s deep understanding of local markets, carefully curated product selections, and efficient supply chain management. The broader economic context for DMart’s operations shows promise, with India’s GDP growth estimated at 7.6% for FY 2023-24, up from 7.0% in the previous year. While challenges such as geopolitical uncertainties and supply chain issues persist, domestic spending and supportive policies have contributed to economic resilience. Looking ahead, GDP growth is projected to moderate to 6.8% in fiscal 2025, influenced by factors such as fiscal consolidation, higher borrowing costs, and stricter regulations. However, potential for rural demand revival exists if normal monsoon conditions prevail and inflation eases. The retail industry in India has shown robust growth, with the overall sector expanding by 11% to reach ₹93 trillion in FY 2023-24. Organized retail grew at 16%, while e-retail surged by 20%. In the organized retail sector, food and grocery items constitute approximately one-fifth of the market value. Projections suggest the retail industry will maintain a compound annual growth rate of 10-11% between 2024 and 2028, driven by economic recovery and moderate inflation. This positive outlook, coupled with anticipated increases in consumer spending, bodes well for the retail sector’s long-term prospects.
Business Updates
Avenue Supermarts, which operates the DMart retail chain, expanded its presence by inaugurating 6 new outlets in the April-June period. The company further increased its footprint with two additional stores in July, bringing the total count to 373 as of July 13, 2024.
The company’s chief executive provided insights into DMart’s expansion and operational adjustments. He noted that the store count had grown to 371 by June 2024’s end. The executive also mentioned rising operational costs, attributing this increase to ongoing efforts to improve customer service and strategically invest in the business’s future potential.
The company reported a consolidated revenue growth of 18.4% for Q1 FY 2025, reaching Rs 14,069 crore. Noronha noted improved contributions from the General Merchandise and Apparel segments, which positively impacted the gross margin compared to the same quarter in the previous fiscal year.
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