DMart Q1 Results Review - Emerging Stronger: ICICI Securities

ICICI Securities Report

Avenue Supermart Ltd.'s Q1 FY25 highlights:

1. healthy same-stores sales growth-led revenue growth,

2. continued improvement (since last five quarters) in revenue throughput from general merchandise and apparel; however, it remains ~20% below pre-Covid levels,

3. improved retail expansion rate (14% YoY) versus 13% in FY24. It was led by large size (~50,000 square feet) store addition (size of new stores added in FY24 was 43,000 sq. ft.; 10% lower versus FY23, 17% lower versus FY22, 31% lower versus FY21),

4. stable operating profit margins (5.9% net profit margin, versus 4.7% during FY17-19),

5. conservative geographical expansion; it added six stores largely in its top four market (67% of total in FY24 versus 73% in FY23 and 54% during FY18-22).

Both two key concerns in DMart: stress in gross margin and slower retail expansion rate appears to have bottomed out. In the current market context, we believe DMart’s result would continue to stand-out versus peers in the retail sector.

Quick commerce is not a worry, in our opinion - see thematic here. Add.

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