Menu

Dmart company overview

  • Home>
  • Dmart company overview
Dmart Q1FY25 Results Showcase Robust Growth and Strategic Expansion
Markets, Research, Research Reports, Result Updates - August 22, 2024

Dmart Q1FY25 Results Showcase Robust Growth and Strategic Expansion

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.

The image added is for representation purposes only

Maruti Suzuki India Q1FY25 Sees Double-Digit Profit Growth Amid Shifting Market Trends

, , , 0 Comment
Read More
Dmart Q1FY25 Results Showcase Robust Growth and Strategic Expansion
Business, Equities, Expert Views, Investor Forum, Market News, Markets, Research, Research Reports, Result Updates - December 11, 2023

DMart Q2FY24 Working Capital Boost: Inventory and Payable Days Decrease

DMart Q2FY24 Working Capital Boost: Inventory and Payable Days Decrease

Company Name: Avenue Supermarts Ltd | NSE Code: DMART | BSE Code: 540376 | 52 Week high/low: 4,229/3,292 | CMP: INR 4,062 | Mcap: INR 2,64,411 Cr | PE: 113

Company Overview:

Avenue Supermart is primarily engaged in the business of retail supermarts under the brand name “D-Mart.” The company offers products in three categories at its stores: Food, Non-food, and Merchandise & Apparel. The Food category includes groceries, dairy, staples, beverages, fruits, and vegetables. Non-food comprises home care, personal care, toiletries, and general merchandise, while Merchandise & Apparel includes bed & bath, toys & games, garments, and footwear. Over the last year, the number of stores increased by 34, bringing the total count to 336, with a presence across 22 cities in India as of September 2023.

Q2 Sees Surge in Topline Growth Despite 9.09% YoY Dip in PAT

In Q2FY24, D-Mart reported an 18.67% YoY growth in topline, while PAT was down 9.09% YoY to 623. The slowdown in PAT was attributed to an increase in operating expenditure (up 18.2% YoY) and tax rate (up 18.5% YoY). This led to a decline in PAT margin by 150 bps YoY and 60 bps QoQ to 4.94% in Q2FY24. The sudden increase in tax expenses is due to the absence of a tax benefit in Q2FY23.

Q2 Maintains EBITDA Stability Amid Margin Decline

The company reported an EBITDA of 1,005 Cr, growing 12.66% YoY but declining 2.93% QoQ. The EBITDA margin during the quarter dropped 42 bps YoY and 75 bps QoQ, primarily due to higher COGS and operating expenditure. Purchase stock increased by 19.3% YoY to 10,771 Cr, while operating expenditure grew 18.2% QoQ to 847 Cr.

Accelerate Working Capital: Optimize Inventory and Payable Days

Lower inventory and payable days led to a faster working capital cycle. Inventory days reduced by 2.1 days to 30.3 days in Q2FY24, and payable days declined 1.2 days to 6.4%. This resulted in a Net working capital day (Inventory days – Payable days) of 23.9 days in H1FY24 compared to 24.8 days in H1FY23, indicating improved working capital efficiency.

Key Operating Metrics

Total bill cuts grew 36% half-yearly to 14.7 Cr in H1FY24. Revenue from sales per retail business area sq ft increased by 5% half-yearly to 16,729 in H1FY24. Like-for-like growth, representing the growth in revenue from the sale of the same store, stood at 8.6% in H1FY24 compared to 41.6% in H1FY23.

Valuation and key ratio

The stock is currently trading at a multiple of 113x EPS (TTM) 35.9 Rs, at the current market price 4,062 with an industry PE at 61.7x. The company’s stock is valued at 15.2 times its book value of 268 Rs per share. In EV/EBITDA multiple, the company holds the 1st position with a multiple of 67.43x, surpassing the industry median of 27.64x. Trailing twelve-month ROE and ROCE stood at 16% and 20.1%, respectively, while the interest coverage ratio demonstrated the company’s solvency at 53.3x in Q2FY24.

Q2FY24 Results Updates – Consolidated

➡️In Q2FY24, Revenue grew 18.67% YoY (+6.4% QoQ) to 12,624 Cr, driven by an increase in volumes.

➡️Gross profit increased 15.13% YoY (+2.8% QoQ) to 1,852 Cr, while gross margin declined 45 bps YoY and 50 bps QoQ to 14.67%.

➡️EBITDA surged 12.66% YoY (-2.93% QoQ) to 1,005 Cr, driven by increased revenue, with EBITDA margin dropping 42 bps YoY and 75 bps QoQ to 7.96%.

➡️Operating profit (EBIT) increased 13.77% YoY (-4.87% QoQ) to 831 Cr, while EBIT margin declined 28 bps YoY and 78 bps QoQ to 6.58%.

➡️PAT was down 9.09% YoY (-5.37% QoQ) to 623 Cr due to the decline in margins, with PAT margin dropping 150 bps YoY and 60 bps QoQ to 4.95%.

➡️EPS for the quarter stood at 9.58 Rs compared to the previous quarter at 10.12 Rs.

Conclusion:

D-Mart showed growth in Q2FY24 with an 18.67% YoY increase in revenue, but PAT declined by 9.09% due to higher operating expenses and tax rates. EBITDA remained robust, although margins dipped. The company demonstrated improved working capital efficiency, and key metrics like total bill cuts and like-for-like growth exhibited positive trends. Valuation metrics suggest a premium stock, and Q2FY24 results indicate a focus on volume-driven revenue growth.

The image added is for representation purposes only

Strategic Partnerships Fuel One97’s Financial Turnaround

, , , , , 0 Comment
Read More