In Q4 FY25/FY25, DMart's standalone revenue grew healthily by 16.7% YoY. The same-store sales growth for two-year and older stores was strong at 8.4% YoY for FY25, led by higher footfalls vs 10.4% YoY. Gross profit grew by 14.7% YoY (-24 bps margin YoY to 13.5%) in the backdrop of increased discounting in the FMCG category (~20% of revenues), yet healthy.
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Dolat Capital Report
Avenue Supermarts Ltd.'s Q4 FY25 gross profit/Ebitda/adjusted profit after tax came soft, primarily due to higher discounting and increased opex. Q4/FY25 standalone revenue/GP/ Ebitda/ APAT came at 16.7/14.7/4.4/-3.4% YoY & 16.7/17.0/10.8/7.3% resp.
The business model remains strong, thereby positioning DMart to deliver 16-18% revenue/EPS CAGR in the long run, led by sizeable opportunity in the large F&G space. Accelerated store expansion, growth from micro markets, category-mix improvement, new category launches and build-in DMart Ready are some potential triggers.
Increased competition from Qcom is for a short-term, which in our view, shall start subsiding in two-four quarters (after which Dmart shall benefit even more) driven by weak profitability and funding crunch, if any. In the interim Dmart is competing effectively.
We trim our APAT by 5/3% for FY26/27E to factor Qcom competition impact.
Downgrade to ‘Reduce' rating with revised target price of Rs 4,150 (incl. Rs 200 for DMart Ready) valuing at 65x FY27E standalone EPS (earlier Rs 4,260 @ 65x FY27). Downgrade is driven largely by 10% stock runup since the last result update and near-term headwinds.
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