Dmart: CMP: 3834: Long Term Sales: 27% 9M_FY25_Sales: 17% |9M_Fy_25 RESULT UPDATE
#### *Company Overview:*
Avenue Supermarts Limited, operating under the brand name D-Mart, is a national supermarket chain offering a wide range of products including groceries, dairy, frozen foods, personal care, home care, bed and bath, crockery, footwear, toys, games, and apparel. More than 55% of sales come from the food, groceries & staples division where there is least competition of Ecommerce. The Company opened its first store in Mumbai, Maharashtra in 2002. The Company had 371 operating stores in 22 cities. They open around 30 to 50 stores every year. Retail Business Area of 15.1 million sq. ft across Maharashtra, Gujarat, Daman, Andhra Pradesh, Karnataka, Telangana, Tamil Nadu, Madhya Pradesh, Rajasthan, NCR, Chhattisgarh and Punjab.
#### *Industry Outlook:*
The retail industry in India is poised for significant growth, driven by increasing consumer spending, urbanization, and expansion of organized retail. The sector is expected to benefit from:
- **Rising Middle Class:** Increased disposable incomes are likely to drive higher spending on retail goods.
- **Digital Transformation:** Adoption of e-commerce and digital payment solutions are transforming the retail landscape.
- **Expansion into Tier II and III Cities:** Retail chains are expanding their footprint into smaller cities, tapping into the growing consumer base.
#### *Peer Group Comparison:*
D-Mart's key competitors in the retail sector include:
- **Reliance Retail:** With a vast network and diversified product range, it is one of the largest retail chains in India. They are India’s Largest retail chain with highest number of retail outlets, Sales and profits. All other combined also are not equal to Reliance retail alone. Reliance Retail is the Giant of the sector.
- **Future Retail:** Known for its Big Bazaar stores, Future Retail also competes in the hypermarket segment.
- **Spencer's Retail:** Operates a chain of supermarkets and hypermarkets.
In comparison, Reliance Retail is Best out of all but as they are not directly listed on stock exchange, Dmart the 2nd runner up is the best with debt free status. D-Mart maintains a strong focus on its EDLC-EDLP strategy, contributing to its competitive pricing and operational efficiency.
#### *Historical Performance:*
They just came up with an IPO during 2017 at the price of 299 & raised an amount of 1870 Cr. With the 1st store in Mumbai in 2002, it crossed 371 stores with more than 1.51 Cr square foot space this year. It took 10 years to open the 1st 10 stores, while 41 Stores opened during this 12 Months alone.
FY_14: Just 10 Years back their sales and Profits were 4687 Cr & 151 Cr respectively.
Fy_18: Came with The IPO at the Price of 299.
FY_19: 5 Years back their sales Profits reached the benchmark of 20,000 Cr & 900 Cr Respectively from total 176 Stores. Price rallied to 1471 which was 5X in just 2 Years.
FY_24: Last year sales Profits reached the benchmark of 50,000 Cr & 2535 Cr Respectively from total 365 Stores. Price rallied to 4525 which was again 3X in 5 Years.
Growth of more than 10X in just 10 years, highly impressive, maintaining Debt-Free Status & even low lease Payment. Wide expansion plans with an optimistic outlook of 30 new stores to be opened every year, it can give a good jump to revenue and profits in the coming time. Have Started expanding even in E-Commerce. Hence, since the IPO, we have discussed this company as the best in the sector and the wealth creator. Many people in our group have held this company since the IPO. Overall we saw Dmart Rallied around 10X in 7 Years.
#### *Current Trend:*
Last year from the beginning itself we saw growth strong but profit margins were squeezed. We ended the Fy_24 with just 7% profits on sales growth of 19% while valuations were 116 PE due to low profit growth.
Q3_fy25 Latest Result Update:
Sales and Store Growth 📈
Total Revenue: Consolidated revenue stood at ₹15,973 crore, marking a growth of 17.5% year-over-year (YoY) 📊 from ₹13,572 crore in the previous year which was 16% till H2, improvements seen.
Store Expansion: DMart added 10 stores during Q3 FY25, bringing the total to 387 stores. The company continues to expand significantly in major states like Maharashtra, Karnataka, and Gujarat. This helped Dmart reach 387 Stores adding 22 New stores this year.
Financial Performance 💰
EBITDA: Consolidated EBITDA for Q3 was ₹1,217 crore, slightly up from ₹1,120 crore in the previous year. However, the EBITDA margin decreased from 8.3% to 7.6% YoY, indicating higher operating costs or less effective cost management relative to sales growth.
Net Profit: Consolidated net profit was ₹724 crore, up from ₹690 crore, a growth of 4.9% YoY. Profit After Tax (PAT) margin decreased from 5.1% to 4.5%, reflecting the margin pressures despite revenue growth.
EPS: Earnings Per Share (EPS) increased to ₹11.12 from ₹10.62, taking Trail EPS to 41.8 & even F_EPS to 42.5 reflecting the modest growth in profitability relative to the number of shares.
Key Performance Indicators (KPIs) 📊
Like-for-Like Growth: Reported at 8.3% for Q3, indicating healthy same-store sales growth, a critical indicator of retail health. This was bad for the last 2 Years, in fact it was (-3%) till H1.
Sales per Square Foot: This metric improved, demonstrating effective asset utilization and sales efficiency in existing store space. It reached 9317 Rs/Sqft from mere 8582 Rs/Sqft.
Profitability, Liquidity, Solvency, and Valuation Ratios 🔍
Profitability Ratios: The decrease in EBITDA and PAT margins suggests a tightening of profitability, possibly due to increased competition or higher cost pressures.
Solvency Ratios: DMart operates with a low level of debt, which is a good indicator of solvency and financial health.
Valuation at CMP of ₹3702: Given the Trail EPS to 41.8, the Price-to-Earnings (P/E) ratio is approximately 89, which suggests a premium valuation typical for high-growth retail companies.
Outlook 🌐
Near Term: The market may continue to pressure margins, especially with competitive discounting in key categories like FMCG. However, revenue growth is robust, supported by store expansions and an increase in sales density.
Long Term: Strategic initiatives like DMart Ready for e-commerce and continuous geographic expansion provide a strong growth trajectory. DMart Ready grew by 21.5% in 9 months FY 2025. In the rapidly evolving dynamics of the grocery ecommerce market, this segment is seeing significantly more demand for home delivery compared to pick-up point and hence they continue to align their business to that extent. Dmart home delivery business now far exceeds their pick-up point sales contribution. We will continue to provide both channels of delivery as an option to our shoppers in select towns. In several towns we now only operate ‘Home Delivery’ as a delivery channel. The leadership transition with Anshul Asawa taking over as CEO might bring fresh strategies and maintain the growth momentum.
Additional Insights 👥
Leadership Transition: Neville Noronha, the CEO, will step down in January 2026, and Anshul Asawa will take over. This transition is critical as leadership plays a pivotal role in retail strategies and execution.
#### *Action:*
D-Mart's 9M FY25 results reflect good growth in LFL Growth, revenue growth and new store openings. All those holding since long and were doing sip during current correction can add more during any fall near 3633 with the target of 5471 this year itself where 5% profits can be booked.
**Long Term**:
- DMart is well-positioned for long-term growth due to its efficient procurement and supply chain practices, cluster-based expansion strategy, and focus on large-format stores in key cities.
- **🔧 Technology investment** and expanding its e-commerce segment will likely enhance its presence and operational efficiency in the years ahead.
Disclosure: Do not treat this document as a recommendation, this was prepared for educational purposes.
#### *Future Outlook for D-Mart:*
D-Mart's continued focus on efficient operations, competitive pricing, and store expansions positions it well to capture the growing retail market in India. The company's strategy to enhance service levels and build future capabilities indicates a strong commitment to sustaining growth and profitability.
We may see Dmart reach the landmark 1 lakh Cr sales till fy_28. 15% sales & Profit growth can be assumed even next decade. Multi Year rally can be expected along with high and consistent profits.
#### *Disclosure:*
We are not a Tip Provider, do not buy or sell before watching and understanding the data on your own.
