Avenue Supermarts Limited Q3 FY 23 Update

Avenue Supermarts Limited Operated 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.

Avenue Supermarts Limited released its Q3 FY 23 numbers on 14th January 2023 and below are some of the key highlights from the results and management commentary

1. Total Revenue for the quarter that ended December 31, 2022, stood at Rs. 11,569 crores, as compared to Rs. 9,218 crores in the same period last year.

2. Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA) in Q3FY23 stood at Rs.965 crore, as compared to Rs. 866 crores in the corresponding quarter of last year.

3. EBITDA margin stood at 8.3 % in Q3FY23 as compared to 9.4% in Q3FY2.

4. Net Profit stood at Rs.589 crores for Q3FY23, as compared to Rs. 552 crores in the corresponding quarter of last year.

Key takeaways from management commentary

1. The street was expecting a 40basis point contraction in the margins however the margins have dropped by almost 110 basis points majorly due to inflationary change

2. Higher expenses and a sharp contraction in profitability dented the bottom line in the quarter.

3. DMART added 4 stores (vs 12 stores estimated) in Q3 FY23, taking the total count to 306 stores

4. FMCG and staples segments continued to outperform the general merchandise and apparel segments, led by
    a. 3-6% price hikes sequentially and
    b. continued soft performance in the value segment

5. The company is in the process of commencing a pharmacy shop-in-shop at one of the stores through a subsidiary, Reflect Healthcare and Retail Private Limited which will be another pilot that will complement the brick-and-mortar business, leveraging the existing store infrastructure

6. Post the Q3 results various brokerages have updated their ratings on the stocks which you can see in the below chart

7. After releasing the numbers the stock has corrected by more than 8 % in less than 5 days and if we see the chart then short-term support can be observed at 3400 whereas long-term support can be seen at 3200 levels

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