Please refer to important disclosures at the end of this report
1
1
(` cr)
4QFY20
4QFY19
%
yoy
3QFY20
% qoq
Revenue
6,256
5,062
6,809
(8.1)
EBITDA
417
372
597
(30.1)
OPM (%)
6.7
7.4
(68bp)
8.8
(209bp)
Reported PAT
271
192
384
(29.4)
Source: Company, Angel Research
For 4QFY2020, Avenue Supermarts Ltd (ASL) posted mixed results. On the top-line
front result was in-line, however EBITDA was below our estimates. Consolidated
revenue grew by ~24% yoy; reported operating margins contracted by 68bps yoy.
On the bottom-line front, ASL reported PAT growth of ~42% yoy due to lower
taxes.
Top-line grew ~24%: During the quarter, ASL’s top-line grew by ~24% yoy to
`6,256r on back of stores expansion and healthy growth in existing stores.
However, in the month of March 2020 it grew by just ~11% vs. March 2019 due
to the effect of lockdown effect in the last 9 days of March. Currently, the company
is operating more than 50% of stores. Further, ASL has also started selling non-
essential items in ~35% of the stores. Some of ASL stores which are functioning on
a 24-hour basis for a very long time now have seen revenue trending closer to pre-
Covid-19 levels despite not selling non-essentials and having restricted footfalls.
Going forward, we expect the company to bounce back gradually to pre-Covid-19
levels.
PAT growth remains strong: On the operating front, the company reported margin
contraction, down 68bps yoy mainly due to ban of non-essentials items (in month
of March 2020), which has high margin and increase in staff cost. On the bottom-
line front, ASL reported PAT growth of ~42% yoy to `271cr on the back of lower
taxes.
Outlook and Valuation: We forecast ASL to report healthy top-line CAGR of ~19%
to `33,730cr over FY2019-21E on the back of strong store addition every year and
higher footfall as ASL offers significant discount compared to e-commerce, Modern
trade & General trade. On the bottom-line front (reported PAT), we estimate ~26%
CAGR to `1,825cr due to strong revenue and gradual improvement in operating
margin. Thus, we maintain BUY on the stock with Target Price of `2,564.
Key Financials
Y/E March (` cr)
FY2019 FY2020
FY2021E FY2022E
Net sales 20,005 24,870 27,781 33,730
% chg 33.1 24.3 11.7 21.4
Adj. Net profit 902 1,301 1,419 1,825
% chg 11.9 44.2 9.1 28.6
EBITDA margin (%) 8.2 8.6 8.4 8.8
EPS (`) 13.9 20.1 21.9 28.2
P/E (x) 164.4 114.0 104.5 81.3
P/BV (x) 26.5 21.5 17.9 14.6
RoE (%) 16.2 18.9 17.1 18.0
RoCE (%) 22.6 23.4 21.4 22.8
EV/Sales (x) 7.4 6.0 5.3 4.4
EV/EBITDA (x)
91.1
69.9
63.7
50.3
Source: Company, Angel Research
BUY
CMP `2,220
Target Price `2,564
Investment Period 12 months
Stock Info
Sector Retail
Market Cap (` cr) 1,48,366
Net Debt (` cr)
476
Beta 0.7
52 Week High / Low 2,559/1,282
Avg. Daily Volume 25,242
Face Value (`) 10
BSE Sensex 30,609
Nifty 9,029
Reuters Code AVEU.BO
Bloomberg Code DMART.IN
Shareholding Pattern (%)
Promoters
75.0
MF / Banks / Indian
6.6
FII / NRIs / OCBs 9.7
Indian Public/Others
8.7
Abs.(%) 3m 1yr 3yr
Sensex
(24.0)
(21.6) 0.3
ASL (2.4) 84.9 233.0
Historical share price chart
Source: Company, Angel Research
Amarjeet S Maurya
022-40003600 Ext: 6831
amarjeet.maurya@angelbroking.com
Avenue Supermarts
Performance Update
0
500
1000
1500
2000
2500
3000
May-17
Aug-17
Nov-17
Feb-18
May-18
Aug-18
Nov-18
Feb-19
May-19
Aug-19
Nov-19
Feb-20
May-20
4QFY20 Result Update | Retail
May 27, 2020
Avenue Supermarts | 4QFY2020 Result Update
May 27, 2020
2
4QFY20 Performance
Y/E March (` cr)
4QFY20
4QFY19
% yoy
3QFY19
% qoq
FY2020
FY2019
% chg
Net Sales
6,256
5,062
6,809
(8.1)
24870.2 20004.5
24.3
Consumption of RM 5406
4,319
25.2
5766
(6.2)
21,103
17,001
24.1
(% of Sales)
84.7
85.0
Staff Costs
126
92
37.2
118
6.5
456
355
28.3
(% of Sales)
2.0
1.8
1.7
1.8
1.8
Other Expenses
307
278
10.3
328
(6.5)
1183 1015
16.5
(% of Sales)
4.9
5.5
4.8
4.8
5.1
Total Expenditure
5,839
4,689
6,212
(6.0)
22,742
18,371
23.8
Operating Profit
417
372
597
(30.1)
2,128
1,633
30.3
OPM
6.7
7.4
8.8
8.6
8.2
Interest
14
12
19.3
18
(18.4)
69
47
46.4
Depreciation
105
66
58.8
95
9.8
374
212
76.2
Other Income
35
13
163.2
6
474.1
24.1
PBT (excl. Ext Items)
333
308
8.3
490
(32.0)
1,745
1,422
22.7
Ext (Income)/Expense -
-
-
-
-
PBT (incl. Ext Items)
333
308
8.3
490
(32.0)
1,745
1,422
22.7
(% of Sales)
5.3
6.1
7.2
7.0
7.1
Provision for Taxation
62
116
(46.6)
106
(41.5)
444
519
(14.6)
(% of PBT)
21.6
36.5
Reported PAT
271
192
384
(29.4)
1,301
902
44.2
PATM
4.3
3.8
5.6
5.2
4.5
Minority Interest After NP (0)
(0)
(0)
(0)
(0)
Reported PAT
271
192
384
(29.4)
1,301
903
44.2
Source: Company, Angel Research
Avenue Supermarts | 4QFY2020 Result Update
May 27, 2020
3
Outlook and Valuation
We forecast ASL to report healthy top-line CAGR of ~19% to `33,730cr over
FY2019-21E on the back of strong store addition every year and higher footfall as
ASL offers significant discount compared to e-commerce, Modern trade & General
trade. On the bottom-line front (reported PAT), we estimate ~26% CAGR to
`1,825cr due to strong revenue and gradual improvement in operating margin.
Thus, we maintain BUY on the stock with Target Price of `2,564.
Downside risks to our estimates
ASL is unable to open new stores due to Covid-19, which could impact negatively
earing of the company
Company Background
Avenue Supermarts Limited is a Mumbai-based company, which owns and
operates D-Mart stores. D-Mart is a national supermarket chain with a focus on
value retailing. The Company offers a wide range of products with a focus on
Foods, Non-Foods (FMCG) and General Merchandise & Apparel product
categories. The Company offers its products under various categories, such as
grocery and staples, daily essentials, processed foods and beverages, snacks,
dairy and frozen, home and personal care, bed and bath, crockery, toys and
games, apparel for kids, ladies and men. The Company opened its first store in
Mumbai, Maharashtra in 2002. As of March 31, 2020 the Company hadm214
stores with Retail Business Area of 7.8 million sq. ft. across Maharashtra, Gujarat,
Daman, Andhra Pradesh, Karnataka, Telangana, Tamil Nadu, Madhya Pradesh,
Rajasthan, NCR, Chhattisgarh and Punjab.
Avenue Supermarts | 4QFY2020 Result Update
May 27, 2020
4
Y/E March (` cr)
FY2018
FY2019 FY2020 FY2021E FY2022E
Net Sales
15,033
20,005
24,870
27,781
33,730
% chg
26.4
33.1 24.3 11.7 21.4
Total Expenditure
13,680
18,371
22,742
25,447
30,779
Raw Material
12,636
17,001
21,103
23,669
28,772
Personnel
283
355
456
556
658
Others Expenses
762
1,015
1,183
1,222
1,349
EBITDA
1,353
1,633
2,128
2,334
2,951
% chg
39.7
20.7 30.3 9.6 26.5
(% of Net Sales)
9.0
8.2 8.6 8.4 8.8
Depreciation& Amortization
159
212
374
429
505
EBIT
1,194
1,421
1,754
1,905
2,447
% chg
42.0
19.0 23.4 8.6 28.5
(% of Net Sales)
7.9
7.1 7.1 6.9 7.3
Interest & other Charges 6
0
47
69
58
58
Other Income
88
48
60
50
50
(% of PBT)
7.2
3.4 3.4 2.6 2.1
Recurring PBT
1,222
1,422
1,745
1,896
2,439
% chg
63.6
16.4 22.7 8.7 28.6
Tax
416
519
444
477
614
(% of PBT)
34.0
36.5 25.4 25.2 25.2
PAT (reported)
806
902
1,301
1,419
1,825
Extraordinary Items
-
-
-
-
-
ADJ. PAT
806
902
1,301
1,419
1,825
% chg
68.4
11.9 44.2 9.1 28.6
(% of Net Sales)
5.4
4.5 5.2 5.1 5.4
Basic EPS (`)
12.4
13.9 20.1 21.9 28.2
Fully Diluted EPS (`)
12.4
13.9 20.1 21.9 28.2
% chg
68.4
11.9 44.2 9.1 28.6
Avenue Supermarts | 4QFY2020 Result Update
May 27, 2020
5
Balance Sheet
Y/E March (` cr)
FY2018
FY2019
FY2020E
FY2021E
FY2022E
SOURCES OF FUNDS
Equity Share Capital
624
624
624
624
624
Reserves& Surplus
4,045
4,963
6,264
7,684
9,509
Shareholders Funds
4,669
5,587
6,889
8,308
10,133
Total Loans
439
700
600
600
600
Deferred Tax Liability
57
68
68
68
68
Total Liabilities
5,166
6,356
7,557
8,976
10,801
APPLICATION OF FUNDS
Gross Block
3,801
5,010
6,210
7,410
8,610
Less: Acc. Depreciation
401
609
984
1,413
1,917
Net Block
3,400
4,400
5,22
6
5,997
6,692
Capital Work-in-Progress
147
377
377
377
377
Investments
68
17
17
17
17
Current Assets
2,033
2,212
2,761
3,481
4,777
Inventories
1,163
1,609
2,112
2,436
3,142
Sundry Debtors
34
64
68
76
92
Cash
560
219
108
358
531
Loans & Advances
147
174
249
361
675
Other Assets
129
146
224
250
337
Current liabilities
494
654
828
900
1,067
Net Current Assets
1,539
1,557
1,933
2,581
3,710
Deferred Tax Asset
12
5
5
5
5
Mis. Exp. not written off
-
-
-
-
-
Total Assets
5,166
6,356
7,557
8,976
10,801
Avenue Supermarts | 4QFY2020 Result Update
May 27, 2020
6
Cash flow Statement
Y/E March (` cr)
FY2018
FY2019
FY2020
E
FY2021E
FY2022E
Profit before tax
1204
1422
1745
1896
2439
Depreciation
159
212
374
429
505
Change in Working Capital
(243)
(351)
(486)
(398)
(957)
Interest / Dividend (Net)
16
24
69
58
58
Direct taxes paid
(403)
(502)
(444)
(477)
(614)
Others
(3)
1
0
0
0
Cash Flow from Operations
730
807
1258
1509
1431
(Inc.)/ Dec. in Fixed Assets
(909)
(1408)
(1200)
(1200)
(1200)
(Inc.)/ Dec. in Investments
1372
450
0
0
0
Cash Flow from Investing
464
(958)
(1200)
(1200)
(1200)
Issue of Equity
0
0
0
0
0
Inc./(Dec.) in loans
(1079)
260
(100)
0
0
Dividend Paid (Incl. Tax)
0
0
0
0
0
Interest / Dividend (Net)
(1439)
(450)
(69)
(58)
(58)
Cash Flow from Financing
(2518)
(190)
(169)
(58)
(58)
Inc./(Dec.) in Cash
(1324)
(341)
(111)
250
173
Opening Cash balances
1884
560
219
108
358
Closing Cash balances
560
219
108
358
531
Avenue Supermarts | 4QFY2020 Result Update
May 27, 2020
7
Key Ratios
Y/E March
FY2018 FY2019
FY2020E
FY2021E
FY2022E
Valuation Ratio (x)
P/E (on FDEPS)
184.0
164.4
114.0
104.5
81.3
P/CEPS
153.7
133.0
88.5
80.3
63.7
P/BV 31.8 26.5
21.5
17.9
14.6
Dividend yield (%) 0.0 0.0
0.0
0.0 0.0
EV/Sales 9.9 7.4
6.0
5.3 4.4
EV/EBITDA
109.5
91.1 69.
9
63.7
50.3
EV / Total Assets 28.7 23.4
19.7
16.6
13.7
Per Share Data (`)
EPS (Basic) 12.4 13.9
20.1
21.9
28.2
EPS (fully diluted) 12.4 13.9
20.1
21.9
28.2
Cash EPS 14.9 17.2
25.9
28.5
36.0
DPS 0.0 0.0
0.0
0.0 0.0
Book Value 72.1 86.3
106.3
128
.3
156.4
Returns (%)
ROCE 23.4 22.6
23.4
21.4
22.8
Angel ROIC (Pre-tax) 26.6 23.5
23.8
22.3
24.0
ROE 17.3 16.2
18.9
17.1
18.0
Turnover ratios (x)
Asset Turnover (Gross Block) 4.0 4.0
4.0
3.7 3.9
Inventory / Sales (days) 28 29
31
32
34
Receivables (days) 1 1
1
1 1
Payables (days) 8 10
10
9 8
Working capital cycle (ex-
cash) (days)
21 21
22
24
27
Source: Company, Angel Research
Avenue Supermarts | 4QFY2020 Result Update
May 27, 2020
8
Research Team Tel: 022
-
39357800 E
-
mail: research@angelbroking.com Website: www.angelbroking.com
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Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to -15%) Sell (< -15%)
Disclosure of Interest Statement
Avenue Supermarts
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No