Avenue Supermarts, the retail giant behind the popular DMart chain and backed by ace investor Radhakishan Damani, has reported impressive financial results for the October-December quarter of fiscal 2023-24 (Q3FY24). The company’s consolidated net profit witnessed a significant increase of 17% at ₹690.61 crore compared to ₹589.68 crore in the corresponding period last year.
Financial Highlights
Consolidated Net Profit – ₹690.61 crore, up 17% YoY
Consolidated Revenue from Operations – ₹13,572.47 crore, up 17.31% YoY
Basic Earnings Per Share (EPS) – ₹10.62, up from ₹9.10 YoY
EBITDA – ₹1,120 crore, up from ₹965 crore YoY
EBITDA Margin – 8.3% in Q3FY24, unchanged from Q3FY23
Total Expenses – ₹12,656.46 crore, up from ₹10,789 crore YoY
Staff Expenses – ₹234.31 crore, up from ₹192.31 crore YoY
Avenue Supermarts CEO & Managing Director Neville Noronha commented on the results, stating that the company concluded Q3 FY24 with a robust revenue growth of 17.2% compared to last year. He highlighted the stabilization of general merchandise and apparel contributions and encouraged post-Diwali trends. However, he noted lower-than-expected sales in non-FMCG during the festive season and highlighted the impact of high inflation in agri-staples (excluding edible oil) within the FMCG sector.
Operational Updates
The company opened five new stores during the December quarter, bringing the total number of stores to 341.
The board approved the appointment of Mr. Harishchandra M. Bharuka as an independent director for a term of five consecutive years, effective from January 13, 2024.
Market Outlook and Expert Opinions
Parth Shah, a Research Analyst at StoxBox, expressed caution regarding the impact of industry consolidation on DMart’s gross margin in the medium term. He mentioned potential challenges from increased bargaining power among competitors in the brick-and-mortar retail segment.
Contrastingly, Amit Goel of Pace 360 recommended that investors consider adding DMart shares to their portfolio. Despite a relatively flat share price in the previous three months, he sees the current dip as a buying opportunity. Amit Goel believes that the stock has the potential to reach ₹4,200 within the next three to six months.
As Avenue Supermarts continues to navigate market challenges, its Q3FY24 performance and strategic moves position it for potential growth in the dynamic retail landscape. Investors must carefully evaluate market conditions and expert insights before making investment decisions.
Summary
Avenue Supermarts, the company behind DMart, reported a robust Q3FY24 performance with a 17% increase in consolidated net profit and revenue. While challenges in non-FMCG and inflationary pressures were noted, experts hold diverse views on the company’s future. Some caution about potential impacts on gross margins, while others see the current share price dip as a buying opportunity, projecting a rise to ₹4,200 in the next three to six months. Avenue Supermarts’ strategic moves, including store expansions and board appointments, indicate a proactive stance in the dynamic retail landscape. Investors are advised to consider these factors carefully amid evolving market conditions.
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