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Informist, Saturday, May 3, 2025

 

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--Avenue Supermarts Jan-Mar net profit INR 6.20 bln vs INR 6.04 bln yr ago 
--Analysts saw Avenue Supermarts Jan-Mar net profit INR 6.20 bln 
--Avenue Supermarts Jan-Mar revenue INR 144.62 bln vs INR 123.93 bln yr ago 
--Avenue Supermarts FY25 net profit INR 29.27 bln vs INR 26.95 bln yr ago 
--Avenue Supermarts FY25 revenue INR 577.90 bln vs INR 495.33 bln yr ago 
--Avenue Supermarts Jan-Mar EBITDA INR 9.81 bln, up 4.4% on year 
--Avenue Supermarts Jan-Mar EBITDA margin 6.8% vs 7.6% year ago 
--Avenue Supermarts: Competitive intensity in FMCG space hit gross margins 
--Avenue Supermarts:Share of food ops revenue in FY25 57.73% vs 56.95% yr ago 
--Avenue Supermarts:Share of FY25 non-food ops sales 20.01% vs 20.68% yr ago
--Avenue Supermarts FY25 net cash flow from ops INR 37.2 bln vs INR 33.4 bln 
--Avenue Supermarts FY25 EBITDA INR 45.43 bln vs INR 40.99 bln yr ago 
--Avenue Supermarts FY25 EBITDA margin 7.9% vs 8.3% year ago 
 

 

By Avishek Rakshit

 

KOLKATA – Rising expenses in the March quarter, which overshadowed revenue growth from store expansions, and a decline in other revenues resulted in Avenue Supermarts Ltd. reporting its weakest growth in net profit in six quarters. The net profit, which was exactly in line with the Street's estimates, grew nearly 3% on year to a little over INR 6 billion.

 

The company's revenue, which grew by around 17% on year to nearly INR 145 billion, was a bit lower than the Street's expectation of INR 148 billion. The company had declared its revenue for the March quarter on Apr. 3 ahead of its results.

 

The earnings before interest, taxation, depreciation, and amortisation during the quarter under review rose by over 4% on year to nearly INR 10 billion, but the EBITDA margin fell to 6.8% from 7.6% a year ago.

 

In a statement, Avenue Supermarts, which operates the DMart brand of retail stores, said three things primarily affected its financial performance in the March quarter. First, it faced increased competitive intensity in the consumer goods industry, which hit its gross margins; secondly, wages of the entry-level workforce rose on account of a mismatch between demand and supply of skilled workers; third, the company continued to invest despite a decline in margins to improve its services with respect to faster turnaround on availability, checkouts, and future store openings. Besides, 28 new store openings during Jan-Mar put pressure on costs.

 

"Profit after tax before prior period adjustments declined by 3.4% over the previous year and was not in line with sales growth," Neville Noronha, the company's outgoing managing director and chief executive officer, said in the statement. "Two years and older DMart stores grew by 8.1% during Q4 FY25 (Jan-Mar) as compared to 10.3% in Q4 FY24 (Jan-Mar). The growth is primarily driven by increased footfalls."

 

During the financial year 2024-25 (Apr-Mar), foods, which usually offer lower margins, accounted for nearly 58% of total sales from stores, up from 57% during FY24, and the share of non-food products, which offer better margins, fell by 1% on year to account for 20% of total revenue.

 

During Jan-Mar, total expenses increased by nearly 18% on year to a little over INR 137 billion, and the largest cost overhead--stock-in trade, which is basically the company's purchase of goods meant for resale to consumers--increased by nearly 18% to touch INR 128 billion. This was largely on account of feeding stocks in the new stores for resale. Employee benefit costs surged nearly 28% to around INR 3 billion, and new stores led the depreciation and amortisation expenses to increase a little over 21% to over INR 2 billion.

 

At a time when expenses rose, other income, which contributes to the company's total earnings and aids profit, fell 25% to INR 391 million.

 

Avenue Supermarts said its online business under the DMart Ready brand is growing well in key metropolitan cities. The company shut down several pick-up points in Jan-Mar, but its home delivery channel is growing strongly and has more than compensated for any loss of sales from the closure of pick-up points. The company termed FY25 a "year of reset and review", and has inferred that its online sales model is scalable and relevant to shoppers in metropolitan regions.

 

During the year ended March, the company's revenue from operations increased by nearly 17% to around INR 578 billion. Its net profit increased by nearly 9% to a little over INR 29 billion. The EBITDA for FY25 increased by around 11% to over INR 45 billion, but the EBITDA margin for the year fell to 7.9% from 8.3% in FY24.

 

Friday, shares of Avenue Supermarts had closed 3.4% lower at INR 4,059.20 on the National Stock Exchange. The company declared its March quarter and full-year results Saturday, a non-trading day.  End

 

Edited by Rajeev Pai

 

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