Avenue Supermarts (DMART) Investor update summary

Business overview and strategy

• General merchandise and apparel (GMA) mix stabilized at 22-23%, with food gaining share due to agri-food inflation; apparel is the fastest-growing category, but overall GMA mix is not expected to return to pre-COVID highs.

• Maintains a diversified product mix: foods, non-food FMCG, and GMA contributed 23%, 57%, and 21% of FY24 revenue, respectively.

• Store expansion follows a cluster-based strategy, with 41 new stores added in FY24, growing from 55 stores in 2011-12 to 365 in 2023-24; future additions expected in the 40-60 range annually.

• E-commerce (DMart Ready) expanded from 1 city in 2016-17 to 23 cities by FY24, focusing on large towns and prioritizing model optimization and profitability over rapid expansion.

• New categories like pharmacy are being piloted in select stores, with positive customer response and plans for gradual scale-up.

Financial and operating performance

• FY24 standalone revenue reached ₹49,533 crore, consolidated revenue was ₹50,789 crore, and EBITDA margin was 8.3% (standalone); PAT was ₹2,695 crore (5.4% margin), with net cash flow from operations at ₹3,343 crore.

• Revenue from operations grew 18.4% YoY; like-for-like sales growth over 24 months was 9.9%, with total retail area at 15.1 million sq ft.

• Inventory and payables days are back to pre-COVID levels, with inventory turnover at 14.6x and ROCE at 19.1%.

• Inventory days remained stable at 29.2, debt/equity ratio was low at 0.02, and fixed asset turnover ratio was 3.1.

• Subsidiaries: Avenue E-Commerce sales rose 31.7% to ₹2,900 crore (loss reduced to ₹185 crore); Align Retail Trades sales at ₹2,800 crore with 44% PAT growth; Avenue Food Plaza sales up 42.3% to ₹177 crore (net loss ₹6 crore).

Margin, mix, and private label strategy

• Gross margin is expected to remain in the 14-15% range, with scale benefits largely passed to consumers to maintain value positioning.

• Private label growth is gradual, focusing on quality and price advantage; private label-only stores are not planned.

• In apparel, nearly all products are private label, but without brand premium; efforts are ongoing to bring more consistency and discipline to the category.