India Equity Research Retail January 12, 2025

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RESULT UPDATE

KEY DATA
Rating HOLD
All eyes on market share
Sector relative Neutral
Price (INR) 3,686
12 month price target (INR) 4,212 DMart posted strong growth in Q3FY25 driven by enhanced LTL
52 Week High/Low
Market cap (INR bn/USD bn)
5,485/3,399
2,399/27.8
growth. It seems to have deployed increasing discounts across
Free float (%) 37.3 segments (lower QoQ in FMCG) to protecting bill size and growing
Avg. daily value traded (INR mn) 3,594.3
footfall/store despite rising competition from quick commerce. DMart
Ready has also stepped up its game in its home delivery execution.
SHAREHOLDING PATTERN We believe DMart’s margins would continue to be under pressure
Sep-24 Jun-24 Mar-24
amid the high competition and management’s focus on market share
Promoter 74.64% 74.64% 74.64%
FII 9.95% 9.22% 8.26%
followed by margins. We are trimming revenue/PAT estimates for
DII 7.43% 7.95% 8.51% FY25 and FY26 by 0.5%/11% and 2.1%/17.4%, respectively, on account
Pledge 0.00% 0.00% 0.000% of lower margins and roll forward to 9mFY27, yielding a revised TP of
INR4,212 (earlier INR5,040); maintain ‘HOLD’.
FINANCIALS (INR mn) Robust growth driven by strong LFL; maintains store addition
Year to March FY24A FY25E FY26E FY27E
DMart reported standalone revenue growth of 17.5% YoY/10.8% QoQ. Blended LFL
Revenue 5,07,888 5,92,764 6,92,922 8,14,060
EBITDA 41,038 45,187 52,323 62,429
growth for the quarter came in at 8.3%. Revenue per sq. ft. increased 3% YoY to
Adjusted profit 25,362 27,123 31,536 38,217 INR39,035 on an annualised basis, but is still 2% lower than the pre-Covid number of
Diluted EPS (INR) 39.0 41.7 48.5 58.7 INR41,930 (achieved in Q3FY19). Bills cut per store has increased 3.4%, whereas
EPS growth (%) 6.2 6.9 16.3 21.2 average bill size has stayed flat for DMart.
RoAE (%) 14.6 13.5 13.7 14.4
P/E (x) 94.6 88.4 76.1 62.8 DMart opened ten stores this quarter taking total store count to 387. This represents
EV/EBITDA (x) 58.4 53.0 45.6 38.0 a double-digit store addition for Q3. It has added 22 stores in 9MFY25 versus 17 in
Dividend yield (%) 0 0 0 0 9mFY24. DMart has a pattern of opening more stores in Q4; hence we are confident
it would meet its target of 45 store addition.
DMart Ready surged about 21.5% in H1FY25 versus full year growth of 32% in FY24.
CHANGE IN ESTIMATES The company did mention that higher discount impact was visible in the FMCG
Revised estimates % Revision category, and that impact has relatively reduced in Q3 sequentially. This is also one
Year to March FY25E FY26E FY25E FY26E of the factors helping the LFL growth for the stores. Furthermore, the increased
Revenue 5,92,764 6,92,922 -0.5% -2.3% losses difference between DMart consolidated and standalone seems a function of
EBITDA 45,187 52,323 -7.3% -12.9% higher delivery sales in the mix versus pickup.
Adjusted profit 27,123 31,536 -10.8% -18.0%
Lower GP/store weighs on margin as store addition picks up
Diluted EPS (INR) 41.7 48.5 -10.8% -18.0%
Gross margin came in at 14.1% (estimate: 14.5%), down 10bp YoY/40bp QoQ. The
fall in gross margin seems to be a function of i) customers cutting back on GM&A and
non-food products in favour of food; and ii) pricing action on the foods portfolio to
PRICE PERFORMANCE tackle the rising quick commerce competition. Operating expenses rose due to
5,400 86,000
service improvements and future investments. EBITDA grew 10.2% YoY to INR10.3bn
5,000 82,800 though the margin (7.9%) remains below pre-Covid levels. PBT rose 6% YoY.
4,600 79,600
4,200 76,400
3,800 73,200
3,400 70,000 Financials
Jan-24 Apr-24 Jul-24 Oct-24 Year to March Q3FY25 Q3FY24 % Change Q2FY25 % Change
DMART IN Equity Sensex
Net Revenue 1,59,726 1,35,725 17.7 1,44,445 10.6
EBITDA 12,172 11,199 8.7 10,938 11.3
Adjusted Profit 7,235 6,904 4.8 6,594 9.7
Diluted EPS (INR) 11.1 10.6 4.8 10.1 9.7

Rajiv Bharati Abneesh Roy Ashish Vanwari

rajiv.bharati@nuvama.com Abneesh.Roy@nuvama.com AshishK.Vanwari@nuvama.com

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Financial Statements
Income Statement (INR mn) Balance Sheet (INR mn)
Year to March FY24A FY25E FY26E FY27E Year to March FY24A FY25E FY26E FY27E
Total operating income 5,07,888 5,92,764 6,92,922 8,14,060 Share capital 6,507 6,507 6,507 6,507
Gross profit 75,143 88,379 1,02,110 1,20,344 Reserves 1,80,471 2,07,589 2,39,119 2,77,331
Employee costs 9,061 11,604 13,664 16,168 Shareholders funds 1,86,978 2,14,096 2,45,627 2,83,838
Other expenses 25,044 31,589 36,123 41,748 Minority interest (5) (5) (5) (5)
EBITDA 41,038 45,187 52,323 62,429 Borrowings 0 0 0 0
Depreciation 7,308 8,707 9,997 11,305 Trade payables 9,848 10,450 12,240 14,372
Less: Interest expense 581 692 784 896 Other liabs & prov 10,815 11,561 13,041 14,832
Add: Other income 1,465 1,516 1,720 1,946 Total liabilities 2,11,725 2,40,208 2,75,029 3,17,186
Profit before tax 34,613 37,303 43,263 52,174 Net block 1,17,592 1,38,180 1,57,666 1,76,049
Prov for tax 9,257 10,186 11,732 13,962 Intangible assets 16,477 14,352 12,039 9,522
Less: Other adj 0 0 0 0 Capital WIP 9,352 9,352 9,352 9,352
Reported profit 25,362 27,123 31,536 38,217 Total fixed assets 1,43,421 1,61,884 1,79,058 1,94,923
Less: Excp.item (net) 0 0 0 0 Non current inv 0 0 0 0
Adjusted profit 25,362 27,123 31,536 38,217 Cash/cash equivalent 7,448 8,397 15,168 28,453
Diluted shares o/s 651 651 651 651 Sundry debtors 1,664 1,942 2,270 2,667
Adjusted diluted EPS 39.0 41.7 48.5 58.7 Loans & advances 17,912 20,068 22,612 25,689
DPS (INR) 0 0 0 0 Other assets 41,279 47,917 55,921 65,455
Tax rate (%) 26.7 27.3 27.1 26.8 Total assets 2,11,725 2,40,208 2,75,029 3,17,186

Important Ratios (%) Free Cash Flow (INR mn)

Year to March FY24A FY25E FY26E FY27E Year to March FY24A FY25E FY26E FY27E
Store count 365.0 411.0 466.0 531.0 Reported profit 25,362 27,123 31,536 38,217
Store addition 41.0 46.0 55.0 65.0 Add: Depreciation 7,308 8,707 9,997 11,305
Retail space (mn sq ft) 15.2 17.1 19.5 22.3 Interest (net of tax) 389 464 525 600
EBITDA margin (%) 8.1 7.6 7.6 7.7 Others (12,038) (16,705) (16,640) (19,779)
Net profit margin (%) 5.0 4.6 4.6 4.7 Less: Changes in WC (6,438) (7,706) (7,587) (9,062)
Revenue growth (% YoY) 18.6 16.7 16.9 17.5 Operating cash flow 27,458 27,295 33,005 39,405
EBITDA growth (% YoY) 12.8 10.1 15.8 19.3 Less: Capex (27,218) (27,170) (27,170) (27,170)
Adj. profit growth (%) 6.6 6.9 16.3 21.2 Free cash flow 240 125 5,835 12,235

Assumptions (%) Key Ratios

Year to March FY24A FY25E FY26E FY27E Year to March FY24A FY25E FY26E FY27E
GDP (YoY %) 7.2 6.5 6.3 6.5 RoE (%) 14.6 13.5 13.7 14.4
Repo rate (%) 6.5 6.5 5.3 5.3 RoCE (%) 19.7 18.6 18.8 19.7
USD/INR (average) 80.0 80.0 80.0 80.0 Inventory days 30 31 31 31
SSSG (%) 9.9 8.4 8.2 8.2 Receivable days 1 1 1 1
COGS (%) 85.2 85.1 85.3 85.2 Payable days 7 7 7 7
Staff costs (%) 1.8 2.0 2.0 2.0 Working cap (% sales) 12.0 11.8 11.7 11.5
Other expense (%) 4.9 5.3 5.2 5.1 Gross debt/equity (x) 0 0 0 0
EBITDA margin (%) 8.1 7.6 7.6 7.7 Net debt/equity (x) 0 0 (0.1) (0.1)
Inventory days 30.2 30.8 30.7 30.7 Interest coverage (x) 58.0 52.7 54.0 57.1

Valuation Metrics Valuation Drivers

Year to March FY24A FY25E FY26E FY27E Year to March FY24A FY25E FY26E FY27E
Diluted P/E (x) 94.6 88.4 76.1 62.8 EPS growth (%) 6.2 6.9 16.3 21.2
Price/BV (x) 12.8 11.2 9.8 8.5 RoE (%) 14.6 13.5 13.7 14.4
EV/EBITDA (x) 58.4 53.0 45.6 38.0 EBITDA growth (%) 12.8 10.1 15.8 19.3
Dividend yield (%) 0 0 0 0 Payout ratio (%) 0 0 0 0
Source: Company and Nuvama estimates

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Passing on the baton

Mr Neville Noronha, the current MD and CEO has chosen to not offer his candidature
for reappointment after completing his current term on January 31, 2026. He joined
DMart in 2004 early on in his career when the store count was five. He joined the
operations team and later on gradually progressed to managerial roles.
The company has appointed Mr Anshul Asawa to replace Mr Noronha as MD and
CEO. He will join the company in Mar-25 as CEO – Designate and shall have time
taking over from Mr Noronha. Mr Asawa is an IIT Roorkee and IIM Lucknow alumnus
and will be joining DMart after a 30-year long stint in HUL, where he had leadership
roles overseeing the growth of product categories and developing impactful
functions in India, Asia and Europe. Mr Asawa currently serves as Country Head of
Unilever in Thailand and General Manager for the Home Care business unit in
Greater Asia.
Interestingly both Mr Asawa and Mr Neville had an experience working with HUL
prior to working in DMart.
There were some other management changes in the organisation, which might not
have an immediate visible effect as detailed below.
Change in senior management personnel
Name Earlier Designation New Designation Remarks
Mr Neville is not offering his candidature for
MD and CEO
Mr Ignatius Neville Noronha reappointment at the end of his tenure next year
(till January 31, 2026)
and is stepping down
Mr Asawa has been working in HUL in multiple
MD and CEO
Mr Anshul Asawa CEO Designate leadership roles across Sales, Marketing and
(effective from 1 Feb2026)
Distribution for the past three decades.
Mr Shah has been associated with DMart since 2007
Vice President-Category and has been instrumental in leading operations
Mr Hitesh Shah Head-Pharma Business
(FMCG) across Mumbai, Gujarat, North and rest of
Maharashtra.
Mr Chandasekharan joined DMart in 2015 and has
Mr Rajeev Chandrasekharan General Manager - DC Head-Centre of Excellence over 23 years of rich experience across multiple
functions and organisations
Source: Company, Nuvama Research

Key parameter summary

(INR mn) Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25
Revenues 1,03,847 1,13,046 1,03,371 1,15,844 1,23,077 1,32,473 1,23,935 1,37,119 1,40,503 1,55,652
Revenue Growth YoY (%) 35.8 24.7 20.1 18.1 18.5 17.2 19.9 18.4 14.2 17.5
EBITDA 8,949 9,745 7,822 10,365 10,018 11,209 9,402 12,210 11,051 12,352
EBITDA Growth YoY (%) 33.5 12.2 5.4 2.8 11.9 15.0 20.2 17.8 10.3 10.2
Adjusted Profit 7,305 6,411 5,052 6,954 6,585 7,368 6,042 8,125 7,104 7,846
Adjusted Profit Growth YoY (%) 62.7 9.4 8.3 2.3 (9.8) 14.9 19.6 16.8 7.9 6.5
Gross margins (%) 14.5 14.3 13.4 14.6 14.0 14.2 13.7 14.9 14.2 14.1
EBITDA margins (%) 8.6 8.6 7.6 8.9 8.1 8.5 7.6 8.9 7.9 7.9
Store Count (Nos.) 302 306 324 327 336 341 365 371 377 387
Store Area (mn. Sq. ft.) 12.4 12.6 13.4 13.5 13.9 14.2 15.2 15.4 15.8 16.1
Sq feet/Store 41,060 41,176 41,358 41,284 41,369 41,613 41,507 41,509 41,910 41,602
Revenue/Sq. ft. (annualised) 33,909 36,175 31,807 34,452 35,935 37,728 33,793 35,907 36,026 39,035
Revenue/Sq. ft. Growth YoY (%) 2.2 (1.5) 0.7 3.6 6.0 4.3 6.2 4.2 0.3 3.5
Source: Company, Nuvama Research

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Revenue breakdown by segment

Change Change Change
Change 6MFY25 9MFY25 Q3FY25
% FY19 FY23 FY24 FY24 vs 6MFY24 6MFY25 vs 9MFY24 9MFY25 vs Q3FY24 Q3FY25 vs
FY19 (bps) 6MFY24 9MFY24 Q3FY24
(bps) (bps) (bps)
Foods 51.25 56.03 56.95 +570 56.2 56.4 +22 56.5 57.0 +53 57.0 58.1 +108
Non-Foods (FMCG) 20.46 20.93 20.68 +22 20.6 20.2 -46 20.6 20.0 -56 20.5 19.7 -74
General Merchandise & Apparel 28.29 23.05 22.37 -592 23.2 23.5 +24 23.0 23.0 +3 22.5 22.2 -34
Gross Margin 14.74 14.48 14.10 -64 14.3 14.5 +28 14.4 14.2 +13 14.2 14.1 -14
Source: Nuvama Research, Company

Transaction size holding up: Average bills per store per day—a proxy for store
traffic—has shown a slight increase. Notably, the average bill size, which surged
during the pandemic due to stockpiling, has remained elevated even with DMart's
expansion into new regions. This suggests that despite inflationary pressures,
customers are maintaining spending levels by shifting their purchases towards food
(a 108bp increase in food's share). This trend is particularly encouraging given that
FMCG companies are reporting declining household inventories amid intensifying
competition from quick-commerce platforms.

Discounting in FMCG: From the product mix lens, a 34bp drop in GM&A in favour of
food should result in 4-5bp decrease in GM, remaining 10bp is from a decrease in
FMCG contribution by 74bp, which should ideally not result in such a drop (10bp =
14-4), implying the core GM in the food segment may have come down amid
competition.

This observation contradicts our previous Q2FY25 note, where we anticipated

increased gross margin in both Foods and GM&A, leading to higher GM in 6MFY25
despite minor shifts in the category mix. In Q3FY25, we believe DMart may have
prioritised aggressive food sales growth over margin protection, aligning with its
everyday low pricing (EDLP) strategy.

Pickup in LTL growth driven by margin reduction

FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 9MFY24 9MFY25
Revenue Growth (Standalone) 38.6% 26.3% 32.7% 23.9% -3.6% 27.6% 37.8% 18.4% 17.9% 16.7%
LTL growth (%) 21.2 14.2 17.8 10.9 -13.1 16.7 24.2 10% 7.7% 8.3%
Store count 131 155 176 214 234 284 324 365 341 387
Growth (%) 19.1% 18.3% 13.5% 21.6% 9.3% 21.4% 14.1% 12.7% 11.4% 13.5%
Retail area (mn sq ft) 4.1 4.9 5.9 7.8 8.8 11.5 13.4 15.2 14.2 16.1
Total bill cuts (mn) 109 134 172 201 152 181 258 303 226 263
Bills cut per store
2,478 2,567 2,847 2,824 1,859 1,915 2,325 2,410 2,506 2,591
per day (No.)
Growth (%) 5.9% 3.6% 10.9% -0.8% -34.2% 3.0% 21.4% 3.6% NA 3.4%
Bill Size (Rs) 1,090 1,120 1,158 1,228 1,565 1,677 1,621 1,635 1,635 1,647
Growth (%) 8.0% 2.8% 3.4% 6.0% 27.5% 7.2% -3.3% 0.8% 0.2%
Source: Company, Nuvama Research

The incremental store space added in Q3FY25 appears to be significantly lower at

30,000 square feet compared with the over 40,000 square feet seen previously and
the 66,000 square feet added in Q2. During the quarter, DMart opened ten new
stores across various regions: Rajasthan (3), Gujarat (2), Punjab (2), Maharashtra (1),
Telangana (1) and Karnataka (1).

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We forecast a significant increase in new store launches during Q4. Slower store
addition has been putting pressure on the matured stores to do the heavy lifting of
driving growth. Matured stores currently stand at 79% of the store mix, which used
to be ~72% pre-covid. Moreover, the old cohort is potentially feeling the pressure
from quick commerce players.

Store opened each quarter

85 30
80.6
78.6 78.2 79.6
80 78.0 78.3 24
75.6 75.6 76.4 76.2
74.5 74.3 73.8 24
74.2 73.5 73.6
75 72.5 73.0 72.7 73.2 72.9 73.2 72.5 18
21
18 17 18
70 12
13
65 10 9 10 6
8 7 8 8
5 5 6 6
60 4 4 4 3 0
2 1
Q1FY21

Q2FY24
Q1FY20

Q2FY20

Q3FY20

Q4FY20

Q2FY21

Q3FY21

Q4FY21

Q1FY22

Q2FY22

Q3FY22

Q4FY22

Q1FY23

Q2FY23

Q3FY23

Q4FY23

Q1FY24

Q3FY24

Q4FY24

Q1FY25

Q2FY25

Q3FY25
Stores over 2 years vintage vs overall store count (%, RHS) Store's opened (#, LHS)

Source: Company, Nuvama Research

Cash profit per store (INR mn) – Maintaining post-Covid trends

35
29.1
27.1 27.9 27.0 26.8
28 26.0 25.9 25.7 26.1
24.7 24.4 24.0
22.822.1 23.3 22.6 22.2
21.2 22.1
20.6
21 18.817.818.3 18.2
15.917.0 16.5
13.7 13.9
14
8.8
6.3
7

0
Q4FY20

Q4FY21

Q4FY22
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
Q1FY20
Q2FY20
Q3FY20

Q1FY21
Q2FY21
Q3FY21

Q1FY22
Q2FY22
Q3FY22

Q1FY23
Q2FY23
Q3FY23
Q4FY23
Q1FY24
Q2FY24
Q3FY24
Q4FY24
Q1FY25
Q2FY25
Q3FY25

Source: Company, Nuvama Research

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Key management commentary by quarter

Q3FY24 Q4FY24 Q1FY25 Q2FY25 Q3FY25
DMart reported LFL growth Our revenue for Q1FY25 Overall H1FY25 like-for-like Our revenue for Q3FY25
of 9.9% for FY24. grew 18.4%. revenue growth was 7.4% grew 17.5% over the
for two years and older previous year. The Q3FY25
Revenue/Recovery stores. The Q2FY25 like for- same store revenue growth
like revenue growth for the for two years and older
same cohort of stores was stores was at 8.3%.
at 5.5%
We have 284 stores that We opened six new stores
are two years or older. during the quarter. Our
We opened 41 new stores total stores stand at 371 as
Store expansion
during the year and our on June 30, 2024.
total store count stands at
365
Gross margin continues to Q4FY24 saw continued Contribution from General We continue to see
be lower than the pre covid uptick in contribution from Merchandise and Apparel increased intensity in
average. Contribution from General Merchandise and continued to improve discounting in the FMCG
General Merchandising Apparel. Our gross margin during the quarter and this category and the
and Apparels has started improvement (Q4FY24 is reflected in the gross consequent impact to high
stabilising in this quarter versus Q4FY23) reflects this margin uptick (Q1FY25 turnover per square feet
and has picked up positive mix improvement. versus Q1FY24). Operating stores in metro towns.
momentum post the costs have gone up due to However, this quarter the
Margin/Mix festive season continuing effort on impact has relatively
improving service levels reduced
and building capability for versus the previous quarter
the future (Q2FY25). We stay
committed to being the
most preferred value
retailer to customers near a
DMart store or a Fulfilment
centre of DMart Ready.
Outlook
Our e-commerce business We clearly see the impact DMart Ready grew 21.5%
commenced operations in of online grocery formats in 9MFY25. In the rapidly
one new city (Gurugram) including DMart Ready in evolving dynamics of the
during the year while large metro DMart stores, grocery ecommerce
continuing to which operate at a very market, we are seeing
deepen its presence in high turnover per square significantly more demand
existing cities. We are now feet of revenue. DMart for home delivery
present across 23 cities in Ready business grew 21.8% compared to pick-up point
India. in H1FY25. and hence we continue to
align our business to that
DMart Ready extent. Our home delivery
business now far exceeds
our pickup point sales
contribution. We will
continue to provide both
channels of delivery as an
option to our shoppers in
select towns. In several
towns we now only
operate ‘Home Delivery’ as
a delivery channel.
This time the festive season
sales were lower than
expected in Non-FMCG.
Others Within FMCG, agri-staples
(ex-edible oil) are going
through significantly high
inflation.
Source: Company, Nuvama Research

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Our forecast is for LTL to stay in high-single digits driven by sharper pricing and
increased focus on market share.

Valuation summary

EPS 56
Target PE (x) 75
TP 4,212
CMP 3,686
Upside 14%
Source: Company, Nuvama Research

Historical one-year forward consensus PE

150

120

90
(x)

60

30

Jun-21
Jun-17

Jun-18

Jun-19

Jun-20

Jun-22

Jun-23

Jun-24
Mar-18
Mar-17

Sep-17
Dec-17

Sep-18
Dec-18
Mar-19

Sep-19
Dec-19
Mar-20

Sep-20
Dec-20
Mar-21

Sep-21
Dec-21
Mar-22

Sep-22
Dec-22
Mar-23

Sep-23
Dec-23
Mar-24

Sep-24
1 Yr Frwd Pre covid average

Source: Bloomberg, Nuvama Research

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Quarterly summary
Year to March Q3FY25 Q3FY24 %YoY Q2FY25 %QoQ FY24 FY25E FY26E
Revenues 1,59,726 1,35,725 18 1,44,445 11 5,07,888 5,92,798 6,94,206
COGS 1,36,204 1,15,523 18 1,22,897 11 4,32,745 5,04,414 5,90,567
Gross Profit 23,522 20,202 16 21,548 75,143 88,384 1,03,639

Employee expenses 3,048 2,343 30 2,852 7 9,061 11,604 13,686

Other expenses 8,301 6,660 25 7,758 7 25,044 31,590 37,324
Total other expenditure 11,349 9,003 26 10,611 7 34,105 43,194 51,011
EBITDA 12,172 11,199 9 10,938 11 41,038 45,190 52,628

D&A expense 2,281 1,893 20 2,078 10 7,308 8,707 9,997

EBIT 9,891 9,306 6 8,860 12 33,730 36,483 42,632

Less: Interest Expense 182 146 25 163 12 581 692 785

Add: Other income 241 329 (27) 335 (28) 1,465 1,516 1,720
Add: Exceptional items - - - - -
Profit before tax 9,950 9,489 5 9,032 10 34,613 37,307 43,567

Less: Provision for Tax 2,715 2,585 5 2,438 11 9,257 10,186 11,809
Less: Minority Interest - - - - - (6) (6) (6)
Add: Share of profit from associates - - 0 - 0 - - -
Reported Profit 7,235 6,904 5 6,594 10 25,362 27,126 31,763

Adjusted Profit 7,235 6,904 5 6,594 10 25,362 27,126 31,763

NOSH (mn) 651 651 0 651 0 651 651 651
Adjusted Diluted EPS (INR) 11.1 10.6 5 10.1 10 39 42 49

as % of net revenues
Gross Margin 14.7 14.9 14.9 14.8 14.9 14.9
Employee cost 1.9 1.7 2.0 1.8 2.0 2.0
Other expenses 5.2 4.9 5.4 4.9 5.3 5.4
EBITDA 7.6 8.3 7.6 8.1 7.6 7.6
Net profit 4.5 5.1 4.6 5.0 4.6 4.6
Source: Company, Nuvama Research

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Company Description
DMart is an emerging national supermarket chain with focus on value retailing. The
company has been one of the largest and most profitable F&G retailers in India. It
offers a wide range of products with focus on foods, non-foods (FMCG) and general
merchandise & apparel product categories. In 2002, DMart opened its first store in
Mumbai. As on Dec 2024, the company had 387 stores with retail business area of
~16.1mn sq. ft.
DMart operates and manages all its stores. The company operates predominantly
on an ownership basis (including long-term lease arrangements, where the lease
period is of more than 30 years and DMart owns the building) instead of rental
model. It opens stores using cluster-based approach based on adjacencies and
focuses on efficient supply chain that targets densely-populated residential areas
with a majority of lower-middle, middle and aspiring upper-middle class consumers.
DMart’s distribution and packing centres form the backbone of its supply chain that
supports its retail store network.

Investment Theme
DMart’s core moat has translated into not only strong revenue growth, but also
robust profitability and return ratios. During FY12-20, DMart sustained a consistent
SSSG above the 10% print. However, that has come off with older stores maturing.
The company derives its competitive prices from right product assortment, lower
payable days, right location size and cluster-based store expansion, among others.

Key Risks
 Sustenance of EDLP programme and increased competition.

 Purchase of real estate at favourable rates and, hence, the store expansion. This
arrangement entails huge initial cash outflow, which may involve taking higher
debt. In the scenario where new stores fail to pick up as anticipated, then
incremental debt taken for the same would need to be serviced from cash flows
of other stores, which is likely to adversely impact the overall profitability of the
business.

 Revenue concentration is largely from Western India – Maharashtra and Gujarat.

 Competition from e-commerce companies

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Additional Data
Management Holdings – Top 10*
CEO Ignatius Navil Noronha % Holding % Holding

CFO Niladri Deb ICICI Pru AMC 2.76 UTI AMC 0.74
Capital Group 1.42 Axis AMC 0.56
COO Udaya Bhaskar Yarlagadda
Vanguard Group 0.94 Nippon Life AMC 0.48
Group CFO Ramakant Baheti Blackrock Inc 0.90 SBI Pension Fun 0.46
Auditor S R B C & Co LLP SBI Funds Manag 0.76 Aditya Birla Su 0.42
*Latest public data

Recent Company Research Recent Sector Research

Date Title Price Reco Date Name of Co./Sector Title
LFL growth tepid; miss on earnings; A few more join the ranks of
13-Oct-24 4,570 Hold 07-Jan-25 Retail
Result Update performer; Sector Update
Paves way for rapid store growth; Retail – Q2FY25 Results Review –
31-Jul-24 5,014 Hold 02-Dec-24 Retail
Company Update Ranks o; Sector Update
Improving GM&A; in-line showing; FSN E-Commerce Ventures (NYKAA
13-Jul-24 4,944 Hold 12-Nov-24 Nykaa
Result Update IN, INR 1; Result Update

Rating and Daily Volume Interpretation

5400 12

4320 10

8
3240
(INR)

(Mn)
6
2160
4
1080 2

0 0
Mar-22

Mar-23

Mar-24
Jul-22

Jul-23
May-22

May-23

May-24

Jul-24
Nov-23

Nov-24
Nov-22
Jan-22

Sep-22

Jan-23

Sep-23

Jan-24

Sep-24

Volume DMART IN Equity Buy Hold Reduce

Source: Bloomberg, Nuvama research

Rating Rationale & Distribution: Nuvama Research

Expected absolute returns
Rating Rating Distribution
over 12 months
Buy 15% 226

Hold <15% and >-5% 63

Reduce <-5% 26

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INVESTING.

Abneesh Roy
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pseudonym=Msg9fxP7wyHcUJj8U9hqnEIit
aBp7XDX,

KUMAR
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518d54fd4f7ba4be4d07cb750c531c68e2c,

Head of Research Committee postalCode=400098, st=Maharashtra,

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Abneesh.Roy@nuvama.com Date: 2025.01.12 18:20:21 +05'30'

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