Avenue Supermarts Q3 Review – Resurgence Of Covid-19 Cases To Impact Q4: Systematix

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Systematix Research Report

Avenue Supermarts Ltd.’s Q3 FY22 revenue grew 22% YoY to Rs 90.7 billion due to normalised operational days and store timings owing to declining Covid-19 cases. Gross margins contracted 22 basis points YoY to 14.9% on a weak product mix (lower share of apparel and general merchandise).

Ebitda margin expanded 28 bps YoY to 9.6% (we estimated 9.3%). D-Mart opened 17 new stores during Q3 FY22 (29 stores in nine months-FY22), taking the total to 263 stores covering an area of 10.3 million square feet. D-Mart Ready sales grew ~40% YoY to Rs 1.5 billion, sustaining the strong online traction.

Near-term sales and customer footfalls will depend on local regulations given the resurgence of Covid-19 in D-Mart’s key markets – Maharashtra, Gujarat, Karnataka, Telangana and Andhra Pradesh (~80% of total stores) account for ~45% of the total active cases in India as of January 07, 2022.

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