DMARTNSEJuly 30, 2025

Avenue Supermarts Limited

22,598words

265turns

20analyst exchanges

6executives

Download PDF ↗DMART stock page →

Management on call

Neville Noronha

MANAGING DIRECTOR AND

Anshul Asawa

- CHIEF EXECUTIVE OFFICER

Ramakant Baheti

GROUP CHIEF FINANCIAL

Niladri Deb

CHIEF FINANCIAL OFFICER – AVENUE SUPERMARTS LIMITED

Vikram Dasu

CHIEF EXECUTIVE OFFICER –

Rushabh Ghiya

INVESTOR RELATIONS – AVENUE SUPERMARTS LIMITED

Key numbers — 40 extracted

10%

t the right method of expansion in the offline space is to open on an average every year at least 10% to 15% or maybe 10% to 20% of your base stores – every year. So, that allows us to get a good CAG

15%

ight method of expansion in the offline space is to open on an average every year at least 10% to 15% or maybe 10% to 20% of your base stores – every year. So, that allows us to get a good CAGR growt

20%

sion in the offline space is to open on an average every year at least 10% to 15% or maybe 10% to 20% of your base stores – every year. So, that allows us to get a good CAGR growth rate from an overa

35.3 crore

ng, everybody. I move to slide number 10 which is the operating & financial summary. We had about 35.3 crores bill cuts in the year just gone by. Like-for-like growth for 24 months plus stores was about 8.4

8.4%

ores bill cuts in the year just gone by. Like-for-like growth for 24 months plus stores was about 8.4%. We added 2 million square feet of operating space and our revenue from sales per square feet cam

2 million

in the year just gone by. Like-for-like growth for 24 months plus stores was about 8.4%. We added 2 million square feet of operating space and our revenue from sales per square feet came at about close to

INR34,000

square feet of operating space and our revenue from sales per square feet came at about close to INR34,000 per square feet. On Slide 11, we have mentioned our revenue from operations, disclosed earlier a

INR57,790 crore

r square feet. On Slide 11, we have mentioned our revenue from operations, disclosed earlier at INR57,790 crores, EBITDA margin of 7.9%, a PAT margin of 5.1% and we generated net cash from oper

7.9%

ve mentioned our revenue from operations, disclosed earlier at INR57,790 crores, EBITDA margin of 7.9%, a PAT margin of 5.1% and we generated net cash from operations of INR3,700 crore

5.1%

ue from operations, disclosed earlier at INR57,790 crores, EBITDA margin of 7.9%, a PAT margin of 5.1% and we generated net cash from operations of INR3,700 crores plus. On the days in

INR3,700 crore

margin of 7.9%, a PAT margin of 5.1% and we generated net cash from operations of INR3,700 crores plus. On the days inventory, days payable, so we continue to have inventory close to 31 days and

14.1%

as 13.6 times and the return on net worth, the return on capital employed came in respectively at 14.1% and 17.8%, a slight moderation from the prior year numbers. Moving to Slide 13, the standalone

Guidance — 20 items

Neville Noronha

opening

“I will take the first few pages to broadly give you a view of the business and the operating and financial summary will be then taken by Niladri, our CFO.”

Neville Noronha

opening

“We have opened 50 stores last year and we hope to continue the acceleration and actually try and open as many more than we have opened in the past.”

Neville Noronha

opening

“So, that allows us to get a good CAGR growth rate from an overall revenue standpoint.”

Abneesh Roy

“I wanted to understand how do you see these four to five months which you have already spent in DMart and now you will be taking over as the CEO in some months.”

Abneesh Roy

“So, I wanted to understand from an experience perspective and overall landscape, what will be your thoughts?”

Abneesh Roy

“So, I wanted to understand given India has changed dramatically, how would you see, what will be your initial thoughts on the massive consumption change which has happened and what will be your key thoughts from that?”

Neville Noronha

“If there has been a slight deterioration from a perspective of what we aspire to, what we delivered, I think there are two things that are happening and which have remained consistent throughout, that there is continuous competition in the FMCG space.”

Abneesh Roy

“Is the fruits and vegetables or the grocery or the staples’ part which is driving growth or say the branded because the margin profile will be different between both these two, within the same bucket?”

Neville Noronha

“So, it will be a slow and steady approach to private label.”

Neville Noronha

“So, anybody who says that we use analytics to review and forecast how much of vegetables I need for the next year will go horribly wrong, because it is totally dependent on the pricing.”

Risks & concerns — 15 flagged

But we like to do stuff that is difficult because then that's how you create moats.

— Neville Noronha

Is there a change in general merchandise thought process and whether this business could evolve differently even though fashion is part of the drag?

— Amit Sachdeva

And what we see in the numbers is a reflection of Quick Commerce plus a weak demand or that 1%, 1.5% was.

— Avi

But I primarily don't see much of a challenge there from that standpoint.

— Neville Noronha

And I mean, from a margin viewpoint, of course, I mean, it seems that the bulk of the drag on the margins has been largely because of this staff cost, whether you look at staff as well as the contractual employees and club other expenses.

— Anand Shah

So, I mean, that drag, I mean, if I set aside the store expansion that you are looking to accelerate and hence you may see some more, but would that sort of now hit a sort of a bottom there at about 8% margin?

— Anand Shah

And when you see good outcomes, it also puts pressure on the incumbents.

— Neville Noronha

Quick Comm with large funds at their disposal are creating pressure on discounting.

— Mihir

So, you have been talking about that real estate, good real estate at the right price is always a challenge in India.

— Ashish Kanodia

So, what I'm saying is that real estate has been a challenge like quality, good quality real estate always has been a challenge.

— Ashish Kanodia

And then just Minimax, I think this is, if I'm not wrong the third year of the format like 17 stores like, what's the thought process and have you seen this becoming maybe an answer to opening much more number of stores in cities like Mumbai, where sometimes the real estate availability is a challenge.

— Ashish Kanodia

You did talk about the impact of the business in the large metro cities, but I was just trying to get a sense from a consumer perspective?

— Latika Chopra

While I understand the concern of general merchandise and apparel contribution (inadvertently mentioned as ‘margins’) going down, but triage data with how my PATs have trended over the same period.

— Neville Noronha

Now, despite five years hence and then inflation etc., that has not increased and the costs though at the same time are increasing, which are keeping a drag on the margins.

— Gaurav Jogani

So, do you see that the margins of DMart Ready, and they remain under pressure for a slightly prolonged period?

— Amnish Aggarwal

Q&A — 20 exchanges

Yea, thanks. My first question is to CEO-designate Anshul. So, you spent 30 years in Unilever, an FMCG company. Now, FMCG company versus retail, overall landscape is very different. I wanted to understand how do you see these four to five months which you have already spent in DMart and now you will be taking over as the CEO in some months. So, I wanted to understand from an experience perspective and overall landscape, what will be your thoughts? What made you join a retail sector? Last 10 years in Unilever, you spent in Europe and 10 months in Thailand. In last 10 years, India has changed dr

Anshul Asawa

Thank you, Abneesh, and good morning, everyone. It's my first time here. So, I'm looking forward to engaging with all of you in the years ahead. Abneesh, you made a lot of comments about me and my experience. I'll focus a little bit on a couple of things which I picked up from your question. So, first and foremost, yes, indeed, it's been 10 years that I've been away from India. I'm coming back after 10 years and India has changed quite dramatically. I personally have enjoyed the dynamism that this market, the people here have and also the opportunities that exist in business and especially in

Hi. Good morning. And Neville, firstly, thanks for your very honest answers and always engaging conversation. So, we'll miss you on these calls. But in terms of questions to hear, firstly, you talked about sort of the white spaces in North India and we saw you open a store or two in UP. So, can you talk more about how this new cluster will evolve for you? Any differences that you're seeing compared with the earlier clusters that you opened as you expanded in other states in North India? And what took you or what finally made you make that decision to enter a state like UP? And the second quest

Neville Noronha

Thanks, Aditya. Yes. I'll take the two questions separately. So, obviously, North India and UP being a very large part of it, that's where large clusters of population is there. And you also have very, very large cities there, which we've totally, I mean, I would not say defocused, but because we are a West focused and a South focused retailer, we came in here late. So, we see a huge opportunity. If you want to accelerate store expansion, which probably over the next six months to eight months, I'm going to put disproportionate time personally also, because North of India is what I'm going to

Thanks for taking my question. Just to follow up on private labels, because you had a discussion on that. While I hear you on the FMCG side, but when you think about general merchandise and apparel part of our portfolio, is there a case to take private label share higher at the earliest? That was my first question.

Neville Noronha

Yes, Sheela, I've answered this over the last four years to five years. There is no reason for you to see any of the products that are on shelf on general merchandise and apparel to not be a private label. They are actually all private labels or pseudo private labels. Some manufacturer putting his own label, doesn't allow him to charge any major premiums. When we negotiate with them, we always negotiate cost of manufacturing plus his margin and that is the selling price to us. That is our margin and that's how it is. So, when you walk into a DMart store and you look at the apparel or you look

Anshul and Neville, thank you so much.

Management

Okay. I'll speak louder. I would say thank you so much, Neville, for the opportunity and thank you for your leadership. I find it very encouraging to hear that there's a greater focus on the network rollout. So, my first question is that, given this impetus, given the whole ecosystem around retail is changing, does that change the ambition on structural growth that you're targeting for, say, next 5 years? [inaudible audio]. That's the kind of every year you want to target. That's been in the past as well. Does that change?

Rushabh Ghiya

Amit, I'm sorry, but your voice is not very clear. Can you repeat the question? You want to dial in back? We can carry on with some other questions while you join back. Let me dial again. Yes, yes. Thanks for that. We can move to the next question and we will let Amit come in again.

Vivek

Hi, this is Vivek. Neville, firstly, thank you for a great letter. Really enjoyed reading it. One thing I was very curious to ask you, when you look back, are there any areas that you think you could have, I mean, DMart has obviously done extremely well under your leadership, but are there any areas that you think you could have probably, not done better, but done things differently when you look back? Okay, got it. And in that context, and I'll come to quick commerce for sure. But in that context, do you think, I mean, you have, I would call it still an experiment. So, you have experimented w

Neville Noronha

I think better would be a better thing to say. Differently, no. I think if I could have, and this question I've asked myself multiple times over so many years, and I don't think I would have done anything differently. We are all very proud of what we've created. But better, I can definitely say this, that we could have accelerated store expansion better. I think that job is unfinished, so I'll continue to chase that for whatever period I'm here. And we'll accelerate store expansion. Vivek, we are very, very clear about this, that great respect for what has happened in the quick commerce space.

Hi, thank you so much for the opportunity, Neville. Am I better and audible now?

Neville Noronha

Yes, yes. Neville, thanks so much, and thank you for your leadership for all these years. And my question first was that you made two very interesting comments that we should have been 600 stores by now. And second thing you said is that the best way to respond to quick commerce is to open more stores. So, I think that's a very encouraging thing to hear. But in that context, I also quote you that you want to open stores with 10% to 15% growth every year. Now, this is more or less what you did in the past. So, in that sense, I want to check with you, given the new realities, has the growth ambi

Hi, Neville. I wanted to first check with you on the DMart Ready business. At the start of the call, you said you had some updated thoughts. Now, after two years of consolidation, how are you looking at DMart-Ready? What next phase that you're looking at? If you could share some colour over there. And also on margins, last time you told us that there is a potential for improving gross margin here by looking at mix. But maybe it's not fallen through this year, but how should I look at that? You could kind of share your thoughts there as well, please?

Neville Noronha

This is only for DMart Ready, right, Avi? Yes, only for DMart Ready. So, yes, I do remember saying something around on those lines for DMart Ready, but then also there is a competitive context that plays out. So, you have to compete from that standpoint. Broadly, what we feel is that this DMart Ready business will not make you lose too much money. So that's one broad view that we have. From a cost of operations standpoint also, we remain consistent with that view that there is an opportunity to reduce costs, but then if you're in the expansion phase, then that kind of gets postponed a bit. But

Yes. Hi, Neville. My first question actually on Quick Commerce is slightly different, that do you think there's anything differently you are doing in your offline business because of how big QC has become and it will become in the next two years in terms of service levels or anything of that sort? That's the first part. And secondly, on the DMart Ready, any work you have done on slotted versus immediate delivery? I know you earlier had a view of slotted delivery, but any refreshed thoughts on that and not doing immediate delivery? Is it largely a cost-related decision or are there other things

Neville Noronha

So, if you're saying that we will deliver in the next 30 minutes or 20 minutes or one hour, obviously not. We don't want to do that. Can we do deliveries in the next three hours or the next six hours? Of course, yes. Our basket values are significantly larger. That, in fact, gives us a sense that customers like us. Customers who use us like us. That's very clear. The stickiness is awesome. So, when you look at stickiness factor of DMart Ready vis-a-vis other online retailers, I think our stickiness is an order of magnitude much larger than others. So, people who know us, love us. But not too m

Yes, thank you so much. Good afternoon, Neville and Anshul and everyone. Two questions from my side. Neville, you highlighted that obviously North India expansion right now is the pet project that you are currently focusing on. Speaking specifically of the UP market, this market is different in a way that there are certain large retailers which have a very high share of private labels in which they operate. And where this may end up impacting is that at least from a basket value perspective, despite the value that we offer, there would be certain players who would be offering a much better dea

Neville Noronha

Too early to comment, but we're reasonably confident that we'll be able to compete. Maybe reserve this question for next year and maybe Anshul will be able to respond to that. But I primarily don't see much of a challenge there from that standpoint. But like I said, we just opened Agra now and we'll see. But I don't see any issues there. We'll definitely follow up. If you're commenting something, I'll wait for my second question. No, you ask the second question, then I'll add on to the previous question. I've just asked for some data. I'll respond to that. But you go ahead with your second que

Thanks for the opportunity. Just one question there. I mean, if I look at Arnab’s question that you have been looking to improve the service levels, and then if I look at the manpower addition that you've been doing, it's sort of up almost about 20%, 25%. And it seems that post-COVID, this number of people, let's say, per store on average had gone down. And now you have built back up in line with this focus on improving customer service as well. So, is that sort of now coming full circle? As in, let's say, on an average, if you need a certain number of manpower per store and it came down, is i

Neville Noronha

See, store headcount, I think, let's put it this way. Probably we've overdone it a little bit. I think there is an opportunity for calibration. I think the stores can be run more efficiently with better focus on execution. If there's one thing which we have not spoken so far, we've been talking for like one hour now, but we haven't spoken about it. I think there's an opportunity to improve execution at stores. We need to have more dedication, more focus on running the stores efficiently. So, there is an opportunity there. But at the same time, will that reflect in P&L next year? Maybe not, bec

Hi, I think this question has been answered in some form, but just looking for a little more clarity on this comment you have made for the last two quarters that we are investing in increasing service levels. What exactly does this mean? I mean, can you give a couple of examples of what you have changed in the store to improve the service quality?

Neville Noronha

It's just basically focusing on having better headcount, better supervision. Better headcount so that you have a better experience as a shopper in a store, especially on a weekend. So, for example, you should not get any out-of-stocks or the relative experiences of out-of-stocks significantly reduces. Second is that queues are not long. All checkouts are operational. Sometimes because of the over-obsession of cost control, managers decide not to hire appropriately. So, trying to pay attention to all those things because the metro city shopper has been more discerning and has now got more choic

Hi, Neville. Hi, Anshul. Thank you for taking my question. Quite a few of the questions that have already answered, despite coming early in the queue. But can you share qualitatively if the number of D2C brands or the new players that you spoke about that you stock in your stores now, what you used to stock earlier, have seen an increase and how the sale contribution for them have gone up? And more essentially, are these not margin accretive for you? So that's my first question.

Neville Noronha

So, it's a sea of products. I mean, are you saying that this is kind of moving the needle much on our profitability? Of course not. They're very small. So, from that standpoint, no. But it's good to have them because the more successful products you have in the store, this is our metric of what is success, it means that you're making the format or the model of DMart more aspirational for people to come to the store and shop, right? So, we are always on the lookout for successful brands to give good throughput. And when you see good outcomes, it also puts pressure on the incumbents. So, when th

Yes, hi, thanks for taking my questions. Am I audible?

Neville Noronha

Yes, hi. Yes, hi. So, my first question is on the new stores that you have been opening up in the non- metro tier I cities. So, I wanted to understand how they are ramping up in terms of revenue. Is it faster or slower? And within that context, I think you spoke about this a little bit earlier as well. What do we try to optimize for? Because we obviously have lower revenue per square feet. So, do we open smaller stores and try to protect the margins? Or is it just the same size of stores that we look at? Yes, so I think this is all derived numbers. You have to just derive it. But I think our n

Hi, Neville. Thank you for the opportunity. The first question is on the accelerated store expansion. So, you have been talking about that real estate, good real estate at the right price is always a challenge in India. Now, if I look at all the comments you have made during today's call, is there also a reason why there is an acceleration because maybe from a guardrails point of view in terms of what is the per square feet rate you want to pay depending on the micro markets in terms of revenue, cost, gross money, etcetera. There is some you are maybe dropping the guardrail a bit on the cost,

Neville Noronha

Yes, you're saying why are we accelerating? I'm saying I understand you're accelerating, but I'm just trying to understand the reason that is it purely because of management time being spent there or is it also a factor of maybe looking at buying some of the expensive real estate as well? Not really. Are you saying that because we are imagining the real estate price will go further up, so we are trying to build a land bank? Is that what you're trying to say? No. So, what I'm saying is that real estate has been a challenge like quality, good quality real estate always has been a challenge. So,

Hi, Neville, always fascinating to hear you. Quick questions after hearing what you mentioned. First one is in Quick Commerce. I just wanted to get your thoughts on how do you view the Quick Commerce acceptance in smaller towns? Is there a credible opportunity in these smaller cities, any on ground colour you have, given some of the QC players are now expanding into Tier 2, Tier 3 cities?

Neville Noronha

Latika, I've spoken enough. Like I said, I have a very high regard for what they have done, amazing stuff. But such pointed questions on that business of which I have no experience and I'm not the right person to answer that question. You should ask this question in that company's Analyst Call. Okay I was just looking more from you talked about some impacts. Sorry. You did talk about the impact of the business in the large metro cities, but I was just trying to get a sense from a consumer perspective? I'll tell you how it impacts us. I've mentioned this earlier. So, if it's an impact on DMart

Thank you so much. I really appreciate all the discussion on the industry. I just have one broad question. We are long-term owners of businesses. If you think from a 10 to 15-year perspective, and obviously DMart has always been positioned as a value company. I'm sure you've thought a lot about this. What about positioning DMart even further as a value company by reducing the gross margin and making the position even stronger versus what's happening in the industry? What are your thoughts about that?

Neville Noronha

I think where we are today is fairly okay, right? If the competitive context around you is at a level very different, or I say higher than you relatively, then I think we are okay where we are. That would be my response to your question. The reason I ask this question is because there's a lot of data that shows that the difference in pricing has been reducing. The biggest moat, obviously, as you said, the gross margin of the company, which in other words, I would say the value perception and the actual value promise that the end consumers feel when they walk into DMart. Are there other ways to

Thank you for taking my question. Neville, my question is with regards to the revenue per square feet. Now, if you look at the revenue per square feet in FY20, that was around INR35,500 odd and right now also we are clocking at the same mark. Now, despite five years hence and then inflation etc., that has not increased and the costs though at the same time are increasing, which are keeping a drag on the margins. So, what is your thought on this? How much of this revenue per square feet do you think is impacted because of the Quick Comm guys operating in the metro towns and taking away some sha

Neville Noronha

Gaurav, again on a lighter note, I have answered this earlier also that these are metrics we hardly look at. I think the only time I look at turnover per square feet is just three or four days prior to the analyst call. But otherwise not, and it is for a reason. The reason being that if 88% (inadvertently mentioned as 92% on the audio call) of my property is ownership, we take a call on what money this location will make basis what we are going to invest in that store. So, turnover per square feet is a vanity for us from that standpoint. For us, ROI at the store is what we look at. So, from th

Yes, hi. Thank you for the opportunity. So, my question is on distribution centre. For the past couple of years, you nearly doubled the distribution centre count. I just wanted to understand how concentrated this expansion has been. I mean, if you could give me a ballpark of other top three states have, or which are the top three states?

Neville Noronha

This is for the distribution centres, right? Yes. Yes, so distribution centres is a function of how many stores we add and what is the concentration of the stores we have. So, this is an ongoing process. And don't go by the numbers, honestly, because distribution centres are a function of what size. So, if I get larger distribution centre, the number of distribution centres will be lower. And if you don't get very large distribution centres, you have to make do with smaller ones, then the number of distribution centres will be larger. So, don't go by that number. For us, DC makes sense when we

Hello, sir. Sir, I think DMart has been the poster boy of running retail in the country, and I think a lot of, I'm sure a lot of takeaways from the way you did the merchandise and the way the retail was run. But there's some business models that are getting listed recently, and maybe we're also getting a look through of how things are being run by other companies. So just wanting to understand that there are companies who are practically running at a 14% EBITDA margin, and in a way, having like, right from shampoo, like, obviously, I'm not doubting that you need to have a L'Oreal or a Pantene

Neville Noronha

Fatema, if I heard you right, you're saying that other retailers have L'Oreal, Pantene and Dove, and we don't have it? Is that what you meant? No, no, I'm saying that you, you definitely continue to have it, but also have an option for customers who cannot afford it, in terms of, your own private branded shampoos, which they can take and start using, in a way migrating them from a soap format to, unbranded shampoo format. And then eventually, maybe they will upgrade to the Levers or the P&G. And in the process, you may good gross margin as well, right? Okay, this all we keep doing, it's all a

Speaking time

Neville Noronha

106

Moderator

Sheela Rathi

Amit Sachdeva

Percy Panthaki

Ashish Kanodia

Fatema Pacha

Vivek

Avi

Jay Gandhi

Opening remarks

Rushabh Ghiya

Thank you. Good morning, all. Welcome to our annual investor and analyst conference call. I have on call with me Mr. Neville Noronha, our MD and CEO, Mr. Anshul Asawa, CEO Designate, Mr. Ramakant Baheti, Group CFO, Mr. Niladri Deb, CFO, Avenue Supermarts Limited and Mr. Vikram Dasu, CEO, Avenue E-Commerce Limited. We hope that you have had a chance to look at the presentation which was uploaded on the exchanges, as well as on our website. We will start the call with Neville briefly taking us through the presentation and post that, we will open the session for the Q&A. Before that, I would just like to draw your attention to the Safe Harbour Statement for good governance and then I will hand over the call. Thank you. Over to you, Neville.

Neville Noronha

Thank you, Rushabh. As has been a template every year, we will rush through the presentation which is already uploaded on the exchange and then we will open for Q&A. I will take the first few pages to broadly give you a view of the business and the operating and financial summary will be then taken by Niladri, our CFO. We go to Page 5. So, just to give a broad sense and colour about the business, I think the last year you would say, in spite of the competitive context in the offline and the online space, our business has been resilient overall in delivering us the desired growth rates. As far as share of revenue is concerned between food, non-food and general merchandise & apparel, it has again remained reasonably consistent and we are quite happy with the outcomes. Obviously, there is an opportunity to do better and we can talk more as we take questions. But broadly the sense is that it is resilient, competing very well and we see a tremendous headroom to grow both in the offline and

Niladri Deb

Thank you, Neville. Good morning, everybody. I move to slide number 10 which is the operating & financial summary. We had about 35.3 crores bill cuts in the year just gone by. Like-for-like growth for 24 months plus stores was about 8.4%. We added 2 million square feet of operating space and our revenue from sales per square feet came at about close to INR34,000 per square feet. On Slide 11, we have mentioned our revenue from operations, disclosed earlier at INR57,790 crores, EBITDA margin of 7.9%, a PAT margin of 5.1% and we generated net cash from operations of INR3,700 crores plus. On the days inventory, days payable, so we continue to have inventory close to 31 days and payables continue to be tight at about 7.2 days. We have historically maintained a 7 to 8 days payable terms across. Debt equity ratio is negligible because the debt that you see on the balance sheet is only due to reclassification of AS116 assets, the lease ones. Fixed assets turnover came in at 3.4. Inventory turn

← All transcripts DMART stock page →

Avenue Supermarts Limited

Market Movers