Avenue Supermarts Q3 net profit up 16.4%

Avenue Supermarts, the company owned by RK Damani and promoter of the D-Mart brand, reported better than expected quarterly results for the Dec-20 quarter.

Avenue Supermarts, the company owned by RK Damani and promoter of the D-Mart brand, reported better than expected quarterly results for the Dec-20 quarter. It reported 10.77% growth in Dec-20 quarter top line revenues yoy at Rs7,542cr. The robust growth in top-line marked a sharp revival in top line and bottom line over sequential Sep-20 quarter.

For the Dec-20 quarter, the operating profits were sharply up 14.74% at Rs575.42cr. This growth was achieved on the back of better churn, better utilization of space and higher level of activity. However, due to the higher revenue base, the operating margin or OPM expanded marginally from 7.37% in the Dec-19 quarter to 7.63% in Dec-20 quarter.

Profit after tax (PAT) for the Dec-20 quarter was up 16.39% at Rs446.95cr. This resulted in the PAT margins for the Dec-20 quarter expanding by 29 bps to 5.93%. Operating profits and PAT more than doubled sequentially, indicating that worst of the pandemic may be over.

Financial highlights for Dec-20 compared yoy and sequentially

Avenue Supermarts (D-Mart)
Rs in Crore Dec-20 Dec-19 YOY Sep-20 QOQ
Revenues 7,542.00 6,808.93 10.77% 5,306.20 42.14%
Operating Profit 575.42 501.50 14.74% 228.78 151.52%
Net Profits 446.95 384.01 16.39% 198.53 125.13%

Diluted EPS (Rs) ₹ 6.85 ₹ 6.09 ₹ 3.04
OPM 7.63% 7.37% 4.31%
Net Margins 5.93% 5.64% 3.74%

Key takeaways from the Dec-20 quarter results

  • In tough market conditions, D-Mart’s EDLC-EDLP formula appears to have worked. This formula entails procuring goods at competitive prices, using operating and distribution efficiency and giving discounts to deliver value to customers.

  • Avenue Supermarts noted that while food and hygiene necessities had picked up back to and even above pre-COVID levels, items like apparel and footwear were taking longer to recover.