Physical Address
Bengaluru, Karnataka
Table of Contents
Avenue Supermarts (DMart) is one of the large Indian retailers. DMart has been instrumental in changing the Indian retail landscape in a big way. DMart entered the retail scene when the Indian retail market was highly unorganized with a sprinkle of small retail chains like Subhiksha, More and Spencers. Big Bazar was increasing its network across India. A few Metro – cash and carry stores dotted the Indian landscape, but the market was mostly dominated by the neighbourhood retail stores.
A few large retail grocery retail stores backed by foreign retail majors like Spar had opened their stores in couple of large cities. Later, Reliance started its grocery and home care retail business with Reliance Fresh and the Star Bazar was launched by the Tatas.
When DMart entered the scene, it became an instant hit. Shoppers lined up during the weekends and it soon became difficult to find a parking spot during these shopping expeditions. The biggest attraction for the Indian shoppers was the kind of discount DMart offered on the maximum retail price(MRP). The discount being offered on the branded items was not very common in India. The queues got bigger at the billing counter which gave an indication to the company that they needed to open another store nearby.
About Avenue Supermarts
The company was founded by Mr. Radhakrishna Damani and family. The first DMart store was launched in Powai, Mumbai in 2002. What instantly attracted people to DMart was the heavy discount offered on all the items. At the end of financial year 2002-03, the company had only two stores, both in Maharashtra. It ended the financial year 2007-08 with 12 stores, 9 in Maharashtra, and 3 in Gujarat.
Since then the company expanded steadily. It now has stores in Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh, Karnataka, Chhattisgarh, Telangana, Delhi NCR, Tamil Nadu, Punjab and Rajasthan. Avenue Supermarts currently has 371 stores across 10 states and 1 union territory. Between 1st April 2024 and 24th August 2024, the company had opened 6 new stores.
The DMart stores offer products under various categories like grocery & staples, apparel, crockery, dairy & frozen, home appliances, home & personal care, footwear, toys, luggage, and fruits & vegetables. Avenue Supermarts also offers products under its own inhouse brands.
Management and Shareholding Pattern
Management Team
The company is headquartered in Thane, Maharashtra and it is led by Mr. Chandrashekhar Bhave (Chairman). The other key people in the management team are Mr. Ignatius Noronha (Managing Director and CEO), Mr. Ramakant Baheti (Group CFO), Mr. Elvin Machado (Whole-time Director), Mr. Bhaskaran N (Chief Operating Officer, Retail), Mr. Niladri Deb (CFO), Mr. Hitesh Shah (Vice President, Category (FMCG)), and Mr. Trivikrama Rao Dasu (CEO, Avenue E-Commerce Limited).
Mr. Noronha holds a management degree from Narsee Monjee Institute of Management Studies and he has been associated with DMart since 2004. Prior to joining DMart, Mr. Noronha had worked with Hindustan Unilever as an executing in market research.
The Promoters and other Shareholders
The promoter shareholding in the company stood at 74.65% at the end of June-2024 quarter. Around 37.22% of the shares are held in individual capacity, the other 37.42% of shares are held through a number of trusts. Out of 37.22% shares held by individual promoters, Mr. Radhakishan Damani held 23.03% and Mr. Gopikishan Damani holds 5.60%. Mrs. Manjri Chandak, who is also a non-executive director, held 2.47% of shares.
The public shareholding in the company was 25.35% at the end of Jun-2024. The mutual funds and FPIs held 6.81% and 9.22% of outstanding shares, respectively. Mr. Ignatius Noronha held 1.95% shares of the company. This leaves only about 7% shares on the table for retail investors.
The Business of Avenue Supermarts
The company acquires the property on which the store has to be built. This ensures that asset is created in the books of the company and negates any effect of increasing rentals. Even though acquisition of a property takes longer and requires clearances from authorities, the company is happy with this model.
In the financial year 2023-24, the company opened 41 new stores. At the end of FY23-24, the total retail business area was 15.15 million square feet. The company had the highest number of stores in Maharashtra(109).
| State | Number of Stores | |
|---|---|---|
| Maharashtra | 109 | |
| Gujarat | 60 | |
| Telangana | 41 | |
| Andhra Pradesh | 34 | |
| Karnataka | 32 | |
| Tamil Nadu | 22 | |
| Madhya Pradesh | 21 | |
| Rajasthan | 17 | |
| Punjab | 13 | |
| NCR | 9 | |
| Chhattisgarh | 6 | |
| Daman | 1 |
As-of 24th August 2024, the company had 371 stores, which means that 6 new stores were added since the end of FY23-24. Since its inception, the company has been steadily growing its network of stores. The company deliberates a lot before starting stores in a new state. In 6 years between 2008 and 2014, the company expanded from 2 stores to 4 states. Between FY22-23 and FY23-24, the company did not add any new state or union territory to its network, but expanded its presence in its existing network of states by adding 10 new stores in Maharashtra, 5 new stores each in Gujarat, Rajasthan and Telangana.
The company also sells products through online channel called DMart ready. The total sales from its online channel was ₹2,899 crore, there was a loss of ₹184 crore. The key categories that contribute to the revenue of Avenue Supermarts are:
- Foods (56.96%)
- Non-Foods(FMCG) (20.68%)
- General merchandise and apparel (22.37%)
Financials of Avenue Supermarts
The revenue of the company has grown at a good pace in the last three financial years. Between FY20-21 and FY21-22, the revenue grew by 28%, the growth in revenue was 38% between FY21-22 and FY22-23. The revenue in FY23-24 was 19% higher than that of FY22-23.
ROE of the company was 13.56%, PE was 120 and the P/B ratio is 16.98. The reserves of the company stood at over ₹18,000 crore and debt of about ₹600 crore.
With every passing year, Avenue Supermarts has been adding assets through land and buildings. At the end of FY23-24, the company had land asset worth ₹6,900 crore in its books, building assets were worth ₹7,062 crore.
Avenue Supermarts maintained inventory number of days at 33 in FY23-24 which is quite good. This means that the company can clear its stocks very fast. The gross margin of the company was 15% and it has stayed in this range in the last 5 years. The net margin was 4.99% which is in-line with the earlier years.
The Operating Cash Flow to PAT ratio was 1.08. The receivables were always quite low, but it increased a bit in FY23-24. The debt-to-equity ratio was 0.02 and inventory turnover ratio was 14.6.
The stock of Avenue Supermarts has given poor returns in last 2 and 3 years periods.
Conclusion
Avenue Supermarts believes in steady growth and it has avoided the path rapid expansion using debt. The company acquires the land on which it wants to build its store. It has a huge market still available to be tapped. The company manages gross margin of 15% and also expanding in the online space. The company is leveraging IT to improve its supply chain. The management is looking for newer growth avenues.
The prospect of the company is good, but the stock is very pricey. The market hasn’t been very favourable towards the company.
References
- DMart official website
- DMart Ready portal
- Avenue Supermarts Annual Report
- Avenue Supermarts investor presentation
- Avenue Supermarts page on BSE India website
- Avenue Supermarts page on Screener.in
- Avenue Supermarts page on moneycontrol.com
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