Avenue Supermarts, the parent company of DMart, witnessed a remarkable 14.2% year-on-year revenue growth in the July to September 2024 quarter. According to the firm's exchange filing on October 12, 2024, its standalone revenue surged to ₹14,050 crore in Q2 FY25, up from ₹12,308 crore in the same period last year. This growth reflects Avenue Supermarts' ability to maintain its Everyday Low Cost – Everyday Low Price (EDLC-EDLP) strategy, which has helped DMart establish a strong foothold in the highly competitive grocery retail market in India.

Profitability also saw an uptick, with the company’s net profit growing by 7.9%, reaching ₹710 crore, compared to ₹659 crore in the corresponding quarter last year. However, the PAT margin slightly narrowed, coming in at 5.0% for Q2 FY25 compared to 5.3% in Q2 FY24.

Avenue Supermarts’ earnings before interest, tax, depreciation, and amortization (EBITDA) also showed an increase, standing at ₹1,105 crore for Q2 FY25, compared to ₹1,002 crore for the same period last year. The EBITDA margin fell slightly, to 7.9% from 8.1%, indicating some pressure on margins despite robust revenue growth.

Basic earnings per share (EPS) for Q2 FY25 came in at ₹10.92, up from ₹10.12 in Q2 FY24, continuing the company’s positive trend in earnings.

Six-Month Performance

For the first six months of FY25, Avenue Supermarts reported total revenue of ₹27,762 crore, as compared to ₹23,892 crore for H1 FY24. EBITDA for H1 FY25 stood at ₹2,326 crore, while the firm’s net profit reached ₹1,523 crore, up from ₹1,354 crore in H1 FY24. The PAT margin for the six-month period remained steady at 5.5%, slightly down from 5.6% in H1 FY24.

This strong financial performance is credited to the company’s EDLC-EDLP strategy, which focuses on maintaining operational efficiencies and procuring goods at competitive prices to pass on the savings to customers.

Neville Noronha, CEO and Managing Director of Avenue Supermarts, highlighted the company’s growth trajectory, stating that like-for-like revenue growth for stores older than two years was 7.4% for H1 FY25, while Q2 FY25 saw 5.5% growth in the same cohort of stores.

Noronha also mentioned the growing influence of online grocery platforms, particularly DMart Ready, which posted a significant 21.8% growth in H1 FY25. He emphasized that online grocery formats are gaining traction, particularly in metro cities, where DMart stores see higher turnover per square foot.

DMart Ready Expansion

The continued expansion of DMart Ready, Avenue Supermarts’ online grocery platform, has been a key driver of growth. The 21.8% increase in DMart Ready sales during the first half of FY25 reflects the company's commitment to capturing a larger share of the burgeoning online grocery market in India. With online shopping becoming a mainstream practice, especially in metro areas, DMart Ready is playing an increasingly important role in the overall growth strategy of Avenue Supermarts.

Outlook and Strategy

Despite the impressive growth figures, Avenue Supermarts continues to face challenges from rising competition, particularly from online grocery platforms. However, the company remains focused on enhancing its operational efficiency and strengthening its EDLC-EDLP strategy to stay competitive. With a strong focus on customer value, the company is expected to continue expanding its presence across India, both through brick-and-mortar stores and the online DMart Ready platform.

For investors looking at Avenue Supermarts' stock, the company’s consistent revenue growth, strong profitability, and expanding online presence make it an attractive option in the retail sector.

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Conclusion

Avenue Supermarts’ solid performance in Q2 FY25 highlights the company's robust business model and its ability to adapt to changing market dynamics. The company’s Everyday Low Price (EDLC-EDLP) strategy continues to drive growth in both physical stores and online grocery segments like DMart Ready, which is becoming increasingly important in metro cities.

As Avenue Supermarts continues its expansion across India, it is well-positioned to benefit from the growing demand for both offline and online grocery retail. For those looking to explore IPO opportunities, you can find the Best IPO to Apply Now - IPO List 2024, Latest IPO, Upcoming IPO, Recent IPO News, Live IPO GMP Today - Finance Saathi.

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