- 04 Oct 2022
- ICICIdirect Research
Reports steady topline growthDMART - 3361 Change: 3.80 (0.11 %)
Avenue Supermarts continued to report steady topline growth in Q2FY23 with three year revenue CAGR of 20% to Rs 10385 crore (up 3% QoQ). As per our calculations revenue/sq.ft declined sequentially by ~1% to Rs 8200/ sq.ft, and continues to remain below pre-covid levels (Rs 9100/sq ft.) Company added 6 new stores during the quarter (16 in H1FY23) taking the total store count to 304.
The revenue growth was broadly in line with our estimates and company has maintained its trajectory of 19-20% CAGR witnessed in the previous 3-4 quarters. Gross margin enhancement would be the critical factor to watch out for as the management in the previous quarter had indicated healthy recovery in GM & apparel segment. Over the last three years, the company has expanded its square feet addition by an impressive three-year CAGR of 25% with average size of new stores being bigger (~60000+ vs. average 35000 sq ft). The new larger stores have never got an opportunity to function in normal circumstances over the last two years. Hence, the revenue throughput per sq ft has remained below pre-Covid levels. With the scenario now normalising and with scale kicking in, we expect the trajectory to improve going forward. The stock price has run up ~30% in the last three months and we believe it captures most of the positives (F24E: P/E 90x).