DMart Q4 net profit rises 21.4% at Rs 203 crore but margins remain weak

Avenue Supermarts, which operates the DMart chain of stores in the country, reported a 21.4 per cent year-on-year net profit growth and a 32.1 per cent year-on-year revenue growth for the quarter ended March 31, 2019, (Q4) at Rs 203 crore and Rs 5,033 crore, respectively.

The numbers were broadly in line with Street estimates. 

A poll by analysts of Bloomberg had pegged net profit at Rs 211 crore and revenue at Rs 5,122 crore for the quarter under review.

Earnings before interest, tax, depreciation and amortisation (Ebitda) for Q4 was at Rs 377 crore, up 27.9 per cent over the year-ago period and again broadly in line with Street estimates of Rs 395 crore. 

But Ebitda margins contracted for the third straight quarter, though the drop was marginal at 20 basis points to 7.5 per cent from a year earlier. This is also the lowest in terms of Ebitda margins for DMart in three quarters.

If viewed sequentially, DMart has seen a sharp recovery in profit growth in Q4 compared with Q3.

For the three months ended December 31, 2018, DMart had reported its slowest net profit growth in eight quarters at 2.1 per cent as it grappled with growing competition in grocery retail.

Third quarter revenue growth came in at 33 per cent (year-on-year), which is also a festive quarter, said analysts, implying the company had managed to maintain its pace of growth in terms of top line in Q4 amid competitive intensity.

While the company did not specify same-store sales growth for Q4, analysts said it was between 15 and 18 per cent for the period under review. Same-store sales growth is the comparable sales growth of stores for one year and above.

For the full year ended March 31, 2019, (FY19), Neville Noronha, managing director (MD) & chief executive officer (CEO), Avenue Supermarts, said same-store sales growth was 17.8 per cent even as revenue grew 32 per cent year-on-year to Rs 19,916 crore and net profit went up 19 per cent from a year earlier to Rs 936 crore.

The FY19 same-store sales growth was higher than the 14.2 per cent reported for FY18, sector analysts said, as the firm pushed higher sales throughput at its stores. 

Revenue from sales per square feet at DMart stores stood at Rs 35,647 for FY19 against Rs 32,719 in FY18, a rise of nearly 9 per cent.

The company also added 21 stores in FY19, of which 12 were added in Q4 alone, taking the total to 176 for the financial year.