Avenue Supermarts FY24 Results

Turnover: ₹67,000 crore
PAT: ₹3,224 crore

Reader Takeaway: Strong brick-and-mortar growth with cautious e-commerce strategy amid competition.

What just happened

Avenue Supermarts announced its financial results for the fiscal year, reporting a turnover of ₹67,000 crore and a Profit After Tax (PAT) of ₹3,224 crore. The company achieved an EBITDA margin of 7.8% and a PAT margin of 4.8%. Operational metrics show strong inventory management with a turnover of 12.8 times and a holding period of 33.2 days.

Why this matters

The results demonstrate Avenue Supermarts' continued strength in its core retail business. The reported figures indicate robust sales and profitability. Investors are keenly watching the company's ability to balance expansion with profitability, especially concerning its e-commerce ventures and competitive pressures.

The backstory

The company has crossed the 500-store mark. Historically, Avenue Supermarts has focused on owned properties for store expansion, but it is increasingly adopting a long-term leasing model to facilitate growth, with 68 stores currently operating on lease. The e-commerce arm, DMart Ready, has incurred losses as the company strategically focuses on a profitable model.

What changes now

Avenue Supermarts aims to grow its store base by approximately 15% annually, leveraging both owned and leased properties. The e-commerce strategy for DMart Ready is being refined with a focus on key cities, a 6-hour delivery model, and improved customer experience to achieve sustainability and profitability, moving away from aggressive, loss-making expansion.

Risks to watch

Key risks include potential saturation in legacy store markets and competition from the rapidly growing quick commerce segment, which could impact same-store sales growth. The ongoing net loss of ₹307 crore from DMart Ready's e-commerce operations is a concern that needs to be closely monitored for its impact on overall profitability.

Peer comparison

While not directly detailed in the filing, the retail sector faces evolving consumer preferences and intense competition. Avenue Supermarts' 'everyday low price' (EDLP) strategy and focus on large basket sizes for essential shopping are differentiating factors against quick commerce players that often focus on smaller, faster deliveries.

Context metrics (time-bound)

• Turnover: ₹67,000 crore for the fiscal year.
• PAT: ₹3,224 crore for the fiscal year.
• EBITDA Margin: 7.8% for the fiscal year.
• PAT Margin: 4.8% for the fiscal year.
• Cash from operations: ₹4,168 crore.
• Total Debt (incl. AS 116): ₹2,267 crore.
• Net Debt: ₹965 crore.
• DMart Ready Net Loss: ₹307 crore.

What to track next

Investors will be keen to observe the execution of the 15% annual store expansion target, the success of DMart Ready's profitability drive, and the company's ability to maintain its EDLP value proposition amidst evolving market dynamics and competitive pressures.