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    Avenue Super.

    DMARTNeutral
    Consumer Services·30 Jul 2024
    Management Summary

    DMart delivered solid FY24 with 18.4% revenue growth, opening 41 stores. Like-for-like growth was strong at 9.9%. Gross margin declined 37bps due to competitive FMCG pricing and GM&A mix shift. E-commerce grew 31.7% with losses at ₹185 Crore in a year of consolidation. Management maintained disciplined approach to expansion, guiding 40-50 stores annually with aspiration for more as store base grows.

    Highlights

    8

    • FY24 standalone revenue ₹49,533 Crore with 18.4% growth; EBITDA margin 8.3% (~₹4,100 Crore); PAT ₹2,695 Crore at 5.4% margin

    • Opened 41 stores in FY24; total retail business area 15.1 million sq ft with 1.8 million sq ft added

    • Like-for-like growth 9.9% for 24M+ stores; 30.3 Crore bill cuts; revenue per sq ft ₹33,000

    • Avenue E-Commerce (DMart Ready) grew 31.7% but loss at ₹185 Crore; now in 24 cities

    • Consolidated revenue ₹50,789 Crore; PAT ₹2,536 Crore (13.5% growth excl. prior year tax gain)

    • ROCE 19.1%; RONW 15.1%; fixed asset turnover 3.6x; inventory turnover 14.6x

    • GMA (General Merchandise & Apparel) contribution declined from 23.04% to 22.37%

    • Store expansion target: 40-50 stores per year; aspiration to open 10-15% of base annually

    Key financials

    Single quarter

    10 metrics
    1. 01Revenue from Operations (Standalone)₹49,533 Cr+18.4%YoY
    2. 02EBITDA Margin (Standalone)8.3%
    3. 03PAT (Standalone)₹2,695 Cr+5.4%YoY
    4. 04Revenue (Consolidated)₹50,789 Cr+18.6%YoY
    5. 05PAT (Consolidated)₹2,536 Cr+13.5%YoY

    Segment breakdown

    Standalone (DMart Stores)
    ₹49,533 Cr Revenue₹4,100 Cr EBITDA
    Avenue E-Commerce (DMart Ready)
    31.7% Sales Growth₹-185 Cr Loss
    Align Retail (Packaging)
    ₹2,800 Cr Sales₹33 Cr PAT
    List

    Guidance & targets

    3
    CategoryTargetPriority
    Store Expansion
    Annual store openings
    40-50 stores
    		High
    Store Expansion
    Long-term store opening rate
    10-15% of base annually
    		Medium
    Category Mix
    GMA contribution
    ~23% (stabilized)
    		High

    Risks & concerns

    7
    RiskSeverity

    GMA contribution secular decline

    GMA declined from 23.04% to 22.37% and will not return to pre-COVID 27-28% levels. Stabilizing around 23%. Higher-margin apparel under pressure from specialist competitors. — Analyst acknowledged

    medium

    Quick commerce emerging as competitive threat

    Management attributes metro challenges to internal execution rather than QC. Believes physical store experience + value positioning is sustainable moat. — Analyst downplayed

    medium

    Gross margin compression from FMCG competitive pricing

    37bps gross margin reduction driven by FMCG price competition and category mix shift toward lower-margin food categories. — Management acknowledged

    medium

    DMart Ready losses continuing

    E-commerce arm lost ₹185 Crore in FY24 despite 31.7% growth. Year of consolidation focused on model refinement over growth. — Analyst acknowledged

    medium

    Areas of Evasion(3)

    • Private label details not shared
    • DMart Ready profitability timeline unclear
    • Forward store numbers not committed

    Q&A highlights

    3

    “what impacts our metro revenues, it's actually our own ability to operate the store... not really because of the competition”

    Management attributes metro store performance issues to internal execution (staffing, management quality) rather than QC competition

    1 min read4 chapters

    Detailed Narrative

    01

    Solid FY24 Revenue Growth with Margin Moderation

    DMart standalone revenue grew 18.4% to ₹49,533 Crore with EBITDA margin of 8.3%. Gross margin declined 37bps from competitive FMCG pricing and mix shift toward lower-margin food categories. PAT of ₹2,695 Crore grew 5.4% (12% excluding prior year tax gain). Revenue per sq ft at ₹33,000, back to FY20 pre-COVID levels.

    02

    Store Expansion Steady at 41 with 40-50 Per Year Guidance

    Opened 41 stores in FY24 adding 1.8 million sq ft. Guided 40-50 stores for FY25. Long-term aspiration is 10-15% of store base annually. Cluster-based expansion prioritizing existing markets. GMA contribution stabilizing around 23%, down from pre-COVID 27-28%.

    03

    DMart Ready in Consolidation Mode

    E-commerce grew 31.7% but this was a deliberate 'year of consolidation' with only one new city added (now 24 cities). Losses at ₹185 Crore. Management focused on fixing model, improving throughputs, and transitioning from pickup to home delivery model.

    04

    Return Ratios Strong but Moderating

    ROCE at 19.1% and RONW at 15.1%, marginally lower than FY23. Fixed asset turnover at 3.6x close to pre-COVID levels. Inventory at 29 days and payables at 7.1 days. Balance sheet remains debt-free (excluding Ind AS 116 lease liabilities). Equity base ₹19,281 Crore.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.