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DMart profit rises 48% on better margins, higher revenue

The company added five stores during the July-September quarter.

Avenue Supermarts, the operator of DMart reported a 48% year-on-year rise in consolidated net profit for July-September quarter of 2019 to `323 crore. The profits were led by higher operating margin and better revenue mix, though it marginally missed the Bloomberg estimate of `332 crore.

The national super market chain’s earnings before interest, tax, depreciation, and amortisation (EBITDA) for the quarter rose 33.24% from the year-ago period to `517 crore on higher sales, while operating margins were higher by 96 basis points to 8.86%. The total income for the September quarter rose 22% from last year to `5,998.9 crore.

Neville Noronha, CEO & managing director of Avenue Supermarts, said that the revenue growth was slightly lower than their estimates while gross margins saw improvement due to a better revenue mix. “PAT margin improvement is in line with revenue growth and was also aided by revision in corporate tax rates,” he added.

The company says it follows everyday low cost – everyday low price (EDLC-EDLP) strategy to procure goods at competitive price, which helps them to maintain operational and distribution efficiency, and provide value to customers by selling at competitive prices.

PAT margin improved to 5.4% in second quarter of FY20 from 4.5% last year, while basic earnings per share (EPS) stood at `5.17 as compared to `3.50 in the corresponding quarter last year.

Sequentially, the EBITDA was down 13.4%, while EBITDA margin was down 163 basis points on account of higher purchases of stock-in-trade, which rose to `5,461.57 crore compared to `4,926.63 crore in the previous quarter. Net profit remained unchanged in comparison with previous quarter.

The company added five stores during the July-September quarter. In first half or the first six months of FY20 the company has added a total of 13 stores. As of September 30, 2019 the company had 189 stores with retail business area of 6.5 million square feet across Maharashtra, Gujarat, Daman, Andhra Pradesh, Karnataka, Telangana, Tamil Nadu, Madhya Pradesh, Rajasthan, NCR, Chhattisgarh and Punjab.

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Source: Financial Express