Saturday, January 9, 2021

D MART - AVENUE SUPERMARTS LIMITED - Q3 FY 21 - RESULTS ANALYSIS - Dt 09.01.21

 

D MART

AVENUE SUPERMARTS LIMITED

Q3 FY 21 RESULTS ANALYSIS

 

Avenue  Supermarts Limited is a Mumbai-based company, which owns and operates D-Mart stores. It was founded by Mr. Radhakishan Damani, the 7th Richest Man in India as of 2020.

D-Mart is a national supermarket  chain  that  offers customers a range of home  and personal products under  one roof. 

The Company offers a wide range of products with a focus on Foods, Non-Foods (FMCG) and General Merchandise & Apparel  product  categories. 

The  Company  offers  its products  under  various  categories,  such  as  grocery and staples, dairy and frozen, fruits and vegetables, home and personal care, bed and bath, crockery, footwear, toys and games, kids’ apparel, apparel for men & women and daily essentials.  

As  of  December  31,  2020,  the  Company had 221 operating stores with Retail Business Area of 8.17 million sq. ft. (adjusted for space leased to AEL during the quarter) across Maharashtra, Gujarat, Daman, Andhra Pradesh, Karnataka, Telangana, Tamil Nadu, Madhya Pradesh, Rajasthan, NCR, Chhattisgarh and Punjab.

 

Consolidated Results :Q3 FY 21  :Q2 FY 21  : Q3 FY 20 

1   Income

a1) Revenue from operations 7,542        5,306     6.809 (10.8%YoY);(42.1 QoQ)

a2) Net  profit after tax             447      199         384

(16.4% YoY); (125%QoQ)

a3)  Diluted EPS  in  Rs.            6.85       3.04      6.09

Market price :Rs.2958;

52-wk high    3,100.00

52-wk low     1,729.30

PE RATIO :108

 

b) Other income                       45          52          6

Total income                      7,587         5.358     6,815

 

2 Expenses

a) Purchases of stock-in-trade 6,386      4,612     5,541

b)  Change in  inventories of stock-in-trade (13) (76) 225

c) Employee benefits expense     139         132     118

d) Finance costs                         11             9         18

e) Depreciation and  amortisation expense 114 101 95

f)  Other expenses                  341             309     328

Total expenses                    6,978         5,087     6,325

3   Profit before tax                 609         272 `     490

4 Tax expenses Current tax      160         73          111

Deferred tax   charge! (credit)     3             1         (5) 

Net  profit after tax                 447          199         384

7 Total comprehensive income for   the  period                                     446         198         383

8 Profit for the   period               447         199      384

9. Total comprehensive income for   the period

                                             446             198     383

10 Paid-up equity share capital 647.77 647.77 627.77

(Face Value - Rs.10 - per   share)

12 Earnings per   share (of ~10!- each) (not annualised):

a)  Basic in                    Rs.6.90         3.07       6.14 

b)  Diluted in                  Rs.6.85        304         6.09

 

The Parent company through Qualified Institutions Placement (QIP) allotted 20,000,000 equity shares to the eligible Qualified Institutional Buyers (QIB) at a issue price of Rs.2,049 per equity share (Including a premium of Rs.2,039 per Equity Share) aggregating to Rs.4,098 crore on 11th February, 2020

•9 stores were added in 9MFY21 and 2 were closed and converted into Fulfillment Center for our E-Commerce Business in 9MFY21

The Statement includes the results of the following entities:Parent Company:

i.Avenue Supermarts Limited

Subsidiaries:

i.Avenue E-Commerce Limited

ii.Align Retail Trade Private Limited

iii.Nahar Seth & Jogani Developers Private Limited

iv.Avenue Food Plaza Private Limited

v.Reflect Wholesale and Retail Private Limited

Consolidated results - some more Analysis

Earnings  before  Interest,  Tax,  Depreciation  and  Amortization  (EBITDA)  in Q3FY21 stood  at  Rs.689  crore,  as  compared  to  Rs.  597  crore in  the  corresponding  quarter  of last year.

EBITDA margin stood at 9.1% in Q3FY21 as compared to 8.8% in Q3FY20. 

Net Profit stood at Rs. 447 crore for Q3FY21, as compared to Rs. 384 crore in the corresponding quarter of last year.

PAT margin stood at 5.9% in Q3FY21 as compared to 5.6% in Q3FY20

Basic Earnings per share (EPS) for Q3FY21 stood at Rs. 6.90, as compared with Rs. 6.14 for Q3FY20.

Total  Revenue  for  9MFY21  stood  at  Rs.  16,731  crore,  as  compared  to  Rs.  18,614  crore  in  the  same  period  last year.

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) in 9MFY21 stood at Rs. 1,130  crore, as compared to Rs. 1,711 crore during 9MFY20.

EBITDA margin stood at 6.8% in 9MFY21 as compared to 9.2% in 9MFY20. 

Net Profit  stood  at  Rs.  686  crore  for  9MFY21,  as compared  to  Rs.  1,030  crore  in  9MFY20. 

PAT  margin  stood  at 4.1% in 9MFY21 as compared to 5.5% in 9MFY20. 

Basic Earnings per share (EPS) for 9MFY21 stood at Rs. 10.58 as compared with Rs. 16.49 for 9MFY20.

COMMENTS :

D-Mart follows Everyday low cost - Everyday low price (EDLC-EDLP) strategy which aims at procuring goods at competitive  price,  using  operational  and  distribution  efficiency  and  thereby  delivering  value  for  money  to customers by selling at competitive prices.

Commenting  on  the  performance  of  the  company Mr. Neville Noronha, CEO & Managing Director, Avenue Supermarts Limited, said: 

The quarter has seen further improvement in our business and financial metrics. Our overall sales and sales mix is now trending very close to our usual times except for specific customer consumption changes post Covid-19.

Apparel,  laundry,  footwear,  travel  and  such  relevant  out  of  home  usage  categories  are  taking  more  time  to recover.  

Agile OPEX management along with a good surge in festival shopping allowed us to deliver a significantly better quarter than the previous two quarters. However, December month didn’t trend as well as the festival months of October and November.

Two years and older DMart stores did ~96% of December 2019 sales in the month of December 2020. We have 162 stores that are 2 years or older. Restricted store operations in certain cities post Diwali due to night curfews and weekend closure led to significantly larger declines in those stores versus same period last year.

There  continues  to  be  a  distinct  behaviour  of  doing  shopping  more  efficiently  by  shoppers.  Lesser  trips  and higher basket values continue to be the norm.

While there is a general reduction in basket values compared to peak pandemic levels, they still continue to be relatively higher than pre Covid-19 levels. 

We also continue to face inconsistent supplies from the non FMCG sector. Raw material prices are also going up. Availability in certain categories is likely to get worse before getting better. This could therefore have an impact on sales mix and margins in the near term.

DMart Ready : This  quarter  we  soft  launched  DMart  Ready  in  select  pin  codes  of  Ahmedabad,  Bangalore  and  Hyderabad. 

In addition, at some of our brick and mortar stores we have leased some part of the space to Avenue E-Commerce Limited  (AEL)  to  commence  E-Commerce  operations  in those  cities. 

Post  Covid-19  environment  is  creating opportunities to launch DMart Ready in more cities.

However, we will continue with our approach of small trials, reviews and controlled acceleration for DMart Ready.

Conclusion

All  our  stringent  safety  precautions  at  stores  shall  continue  as  before  to  ensure  our  employees  and  customers have a safe place to work and shop. We also intend to continue extended store operating hours. This is allowing us to serve our customers in a more safe and efficient way.

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