Six Quarters In, the Gap Finally Closes
This filing covers the quarter ended December 31, 2023 - Q3 of Avenue Supermarts' FY2024, the festive/Diwali quarter. Revenue grew 17.32% year-on-year to Rs. 13,572.47 crore, and net income grew almost exactly in step at 17.09% to Rs. 690.41 crore. Total expenses grew 17.31% to Rs. 12,656.46 crore - within a rounding error of revenue growth, the closest match since this site's coverage first flagged real margin compression starting Q4 FY2022. Operating Income (reconstructed) grew 16.26% to Rs. 963.48 crore, and operating margin held essentially flat at 7.10% versus 7.16% a year ago - a one-tenth-of-a-point move, not a trend.
Employee Benefit Expense remains the fastest-growing major cost line for a second straight quarter, up 21.84% to Rs. 234.31 crore, still ahead of Other Expenses (+18.89%) and D&A (+12.64%, the slowest of the three again). The effective tax rate held flat at 27.24% versus 27.36% a year ago - no tax-line distortion this quarter, in either direction, making this the cleanest quarter-over-quarter read in the arc.
The Prescription
Six quarters into a margin-compression story, this is the first quarter where the story genuinely doesn't apply - expenses and revenue grew at nearly identical rates, and every major cost line stayed in a reasonable band around that. Whether this is a real inflection or a one-quarter festive-season anomaly (stronger same-store sales absorbing fixed costs better) is not answerable from a single data point; the next couple of quarters will show which. What the company should do regardless: keep disclosing employee-cost growth without headcount or same-store-sales context, which continues to leave a reader unable to tell whether 21.84% payroll growth this quarter reflects store expansion, wage inflation, or a seasonal festive-staffing bump that will reverse next quarter.
Key Financial Metrics
Quarter ended December 31, 2023 (consolidated), compared against Q3 FY2023 (quarter ended December 31, 2022)
FX: INR 82.30 = USD 1 (December 29, 2023 month-end close).
Festive-season seasonality note: this quarter contains Diwali and the bulk of India's autumn/winter festive retail spending, structurally the strongest quarter of DMart's fiscal year.
| Metric | Q3 FY2024 (INR) | Q3 FY2024 (USD) | YoY Change | Note |
|---|---|---|---|---|
| Net Revenue (revenue from operations) | Rs. 13,572.47 crore | ~$1,649.1M | ⚠️ +17.32% | |
| Total Income (incl. other income) | Rs. 13,605.39 crore | ~$1,653.1M | ⚠️ +17.28% | |
| Total Expenses | Rs. 12,656.46 crore | ~$1,537.8M | ⚠️ +17.31% | Essentially in line with revenue growth for the first time in this arc |
| Operating Income (EBIT, reconstructed) | Rs. 963.48 crore | ~$117.1M | ✅ +16.26% | 7.10% margin, essentially flat vs 7.16% a year ago |
| Adjusted EBITDA» (reconstructed) | Rs. 1,152.81 crore | ~$140.1M | ✅ +15.65% | 8.50% margin, down slightly from 8.62% |
| Finance Costs | Rs. 14.55 crore | ~$1.8M | ⚠️ -14.31% | |
| Profit Before Tax | Rs. 948.93 crore | ~$115.3M | ✅ +16.90% | |
| Tax Expense | Rs. 258.52 crore | ~$31.4M | ✅ +16.40% | Effective rate 27.24%, flat vs 27.36% a year ago |
| Net Income | Rs. 690.41 crore | ~$83.9M | ✅ +17.09% | 5.09% net margin, flat vs 5.10% a year ago |
| Basic / Diluted EPS | Rs. 10.62 / Rs. 10.59 | ~$0.129 / ~$0.129 | ✅ +16.70% (basic) |
Operating Income and Adjusted EBITDA are reconstructed as PBT + Finance Costs [+ D&A for EBITDA]. No balance sheet or cash flow statement is disclosed as a separable quarter figure in this filing type. Paid-up equity share capital held flat at Rs. 650.73 crore (~65.07 crore shares).
Target Valuation Range
DMart's stock closed this quarter at Rs. 4,082.65, up 11.08% from Q2 FY2024's Rs. 3,675.60 close - a solid festive-quarter rally that, unlike the prior two quarters, actually coincides with genuinely improving fundamentals rather than running ahead of or against them.
DMart traded at roughly Rs. 2,65,670 crore (~$32.3B) market capitalization at this quarter's close (December 29, 2023) - a trailing-twelve-month P/E near 109x, up from Q2 FY2024's ~103x on both a higher price and genuinely faster TTM earnings growth.
| Item | Value |
|---|---|
| Share price (December 29, 2023 close) | Rs. 4,082.65 |
| Shares outstanding | ~65.07 crore |
| Market capitalization | ~Rs. 2,65,670 crore (~$32.3B) |
| Total liabilities | Not disclosed (no balance sheet in this filing) |
| Less: cash and equivalents | Not disclosed |
| Enterprise value | Not computable without a balance sheet - market cap used as a proxy below |
No real DCF is possible without a balance sheet. Trailing-twelve-month net income through this quarter - Rs. 690.41 crore (this quarter) plus Q2 FY2024 (Rs. 623.35 crore), Q1 FY2024 (Rs. 658.71 crore), and Q4 FY2023 (Rs. 460.10 crore) - totals Rs. 2,432.57 crore, implying a trailing P/E near 109.2x.
| Metric | This quarter (Q3 FY2024) | Prior quarter (Q2 FY2024) |
|---|---|---|
| TTM Net Income | Rs. 2,432.57 crore | Rs. 2,331.80 crore |
| Trailing P/E | ~109x | ~103x |
| TTM Revenue | ~Rs. 48,656.39 crore | ~Rs. 46,652.97 crore |
| EV/Revenue (market cap as EV proxy) | ~5.5x | ~5.1x |
This is the first quarter in the margin-compression arc where a rising multiple is actually backed by improving, not merely resilient, underlying growth - worth watching whether it holds into the next (non-festive) quarter before reading too much into one data point.
| Scenario | Key assumption | Implied trailing P/E | Implied value |
|---|---|---|---|
| Current (period-end close) | Actual December 29, 2023 close | ~109x | Rs. 4,082.65/share (~Rs. 2,65,670 crore, ~$32.3B) |
| Bear | The festive-quarter margin improvement proves seasonal and reverses next quarter, and the multiple de-rates back down | ~90x | ~Rs. 3,365/share (~Rs. 2,18,931 crore, ~$26.6B) |
| Base | Multiple holds near where it closed, consistent with the trailing P/E above | ~109x | ~Rs. 4,075/share (~Rs. 2,65,150 crore, ~$32.2B) |
| Bull | The margin-compression arc genuinely ends and the market re-rates the multiple toward the top of its recent range | ~135x | ~Rs. 5,047/share (~Rs. 3,28,397 crore, ~$39.9B) |