Avenue Supermarts DCF Valuation
Avenue Supermarts DCF Valuation
Company Overview
Avenue Supermarts Ltd.
About the company:
Avenue Supermarts Limited (DMart) is a national
Recommendation : XXX INR
supermarket chain, with a focus on value-retailing. We CMP : 4,287
offer a wide range of products with a focus on Foods, Target Price : XXXX
Non-Foods (FMCG) and General Merchandise
& Apparel product categories. Stock Data (as on May 31, 2024)
NIFTY : 22547.8
52 Weeks H/L (INR) : 4924/3437
Store Network: Market Cap (INR Crs) : 2,79,955
As of Dec,23 Co. operates 366 stores across 22 cities Outstanding Shares (Crs) : 65.07
and one union territory with an 11.8 million square ft Dividend Yield (%) : 0.00%
retail business area. AVL has its highest presence in NSE Code : DMART
Maharashtra with 103 stores and followed by Gujarat
Relative Stock Performance - 1Y
with 57 stores and Telangana with 36 stores.
FY20: Avenue supermarts added 38 news stores bringing the total count to
214 stores
FY21: 22 new stores were opened, with 2 existing stores converted into
fulfillment centres, totally in 234 stores
FY22: the company's significant growth with 50 new stores reaching a total
of 284 stores
FY23: there were 40 new stores added, and one location was reconverted
from a fulfillment Centre to a DMart store, making a total 324 stores
FY24: Avenue supermarts added 41 new stores, bringing the total store
count to 365
Operating and Financial Summary
Total Bills Cut: Increased from 20.1 Crores in FY20 to 30.3 Crores in
FY24.
Like For Like Growth: Highest in FY23 (24.2%), lowest in FY21 (-13.1%).
Retail Business Area: Expanded from 7.8 Mn Sq. Ft. in FY20 to 15.1 Mn Sq.
Ft. in FY24.
Revenue from Sales per Sq. Ft.: Highest in FY24 (INR 32,941), lowest in FY21
(INR 27,306).
Operating and Financial Summary (Cont’d)
EBITDA: Lowest in FY21 (INR 1,742 Crores, 7.3%), highest in FY24 (INR 4,099
Crores, 8.3%).
PAT: Lowest in FY21 (INR 1,165 Crores, 4.9%), highest in FY24 (INR 2,695
Crores, 5.4%).
Net Cash Flow from Operations: Consistently increased from INR 1,674
Crores in FY20 to INR 3,343 Crores in FY24.
Operating and Financial Summary (Cont’d)
x Assumptions
Valuation Assumptions
Growth Rate 11.24%
Terminal Growth Rate 7.50%
WAAC 15.15%
PV of FCFF 5,108.41
PV of Terminal Value 1,13,596.24
Enterprise Value 1,18,704.65
Add:Cash 638.18
Less:Debt -
Equity Value 1,19,342.83
No. of Shares 65.07
Equity Value per Share 1,833.98
Share Price 4,684.00
x Discount/Premium 2.55x
Yash Anand
Avenue Supermarts Ltd.
Peer Comps
Debt/ Debt/ Levered Unlevered
1 Equity Capital 2 3
Name of the Comps Country Total Debt Total Equity Tax Rate Beta Beta
Avenue Super. India 592.2 3,03,668.8 30.00% 0.20% 0.19% 0.97 0.97
Trent India 1,753.0 1,65,056.4 30.00% 1.06% 1.05% 0.97 0.96
Vedant Fashions India 10,174.8 26,845.1 30.00% 37.90% 27.48% 0.97 0.77
Aditya Bir. Fas. India 444.4 24,988.1 30.00% 1.78% 1.75% 0.97 0.96
Metro Brands India 1,059.8 30,851.8 30.00% 3.43% 3.32% 0.97 0.95
Yash Anand
Avenue Supermarts Ltd.
Yash Anand
Avenue Supermarts Ltd.
67,690.8
3 2017A 11,897.7
63,045.2
38.61%
58,399.6
4 2018A 15,033.2 26.35%
53,754.0
50,788.8
5 2019A 20,004.5 33.07%
49,108.4
6 2020A 24,870.2 24.32%
42,839.6
7 2021A 24,143.1 -2.92%
8 2022A 30,976.3
30,976.3
28.30%
24,870.2
9 2023A 42,839.6
24,143.1
38.30%
20,004.5
10 2024A 50,788.8 18.56%
15,033.2
11,897.7
11 2025E 49,108.4 -3.31%
8,583.8
12 2026E 53,754.0
6,439.4
9.46%
13 2027E 58,399.6 8.64%
14 2028E 63,045.2 7.95%
15 2029E 67,690.8 7.37% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Yash Anand
Avenue Supermarts Ltd.
COGS ₹ 5,835.9 ₹ 7,773.2 ₹ 10,706.0 ₹ 13,413.8 ₹ 18,009.5 ₹ 22,394.3 ₹ 22,012.9 ₹ 28,028.5 ₹ 38,563.3 ₹ 44,180.7 ₹ 46,685.1
COGS % Sales 90.63% 90.56% 89.98% 89.23% 90.03% 90.04% 91.18% 90.48% 90.02% 86.99% 91.92%
Gross Profit ₹ 603.5 ₹ 810.6 ₹ 1,191.7 ₹ 1,619.4 ₹ 1,995.0 ₹ 2,475.9 ₹ 2,130.2 ₹ 2,947.8 ₹ 4,276.3 ₹ 6,608.2 ₹ 4,103.8
Gross Margins 9.37% 9.44% 10.02% 10.77% 9.97% 9.96% 8.82% 9.52% 9.98% 13.01% 8.08%
Selling & General Expenses ₹ 147.2 ₹ 146.1 ₹ 222.5 ₹ 266.6 ₹ 361.7 ₹ 347.6 ₹ 385.3 ₹ 445.5 ₹ 637.5 ₹ 2,504.4 -
S&G EXP % Sales 2.29% 1.70% 1.87% 1.77% 1.81% 1.40% 1.60% 1.44% 1.49% 4.93% 0.00%
EBITDA ₹ 456.3 ₹ 664.5 ₹ 969.2 ₹ 1,352.9 ₹ 1,633.3 ₹ 2,128.3 ₹ 1,744.8 ₹ 2,502.4 ₹ 3,638.8 ₹ 4,103.8 ₹ 4,103.8
EBITDA Margins 7.09% 7.74% 8.15% 9.00% 8.16% 8.56% 7.23% 8.08% 8.49% 8.08% 8.08%
Depreciation ₹ 81.5 ₹ 98.4 ₹ 127.8 ₹ 159.0 ₹ 212.5 ₹ 374.4 ₹ 414.2 ₹ 498.1 ₹ 638.9 ₹ 730.8 ₹ 730.8
Depreciation % Sales 1.27% 1.15% 1.07% 1.06% 1.06% 1.51% 1.72% 1.61% 1.49% 1.44% 1.44%
EBIT ₹ 374.7 ₹ 566.0 ₹ 841.4 ₹ 1,193.9 ₹ 1,420.8 ₹ 1,753.9 ₹ 1,330.7 ₹ 2,004.3 ₹ 2,999.9 ₹ 3,373.0 ₹ 3,373.0
EBIT Margins 5.82% 6.59% 7.07% 7.94% 7.10% 7.05% 5.51% 6.47% 7.00% 6.64% 6.64%
Inter est ₹ 72.4 ₹ 91.3 ₹ 122.0 ₹ 59.5 ₹ 47.2 ₹ 69.1 ₹ 41.7 ₹ 53.8 ₹ 67.4 ₹ 58.1 ₹ 58.1
Interest % Sales 1.12% 1.06% 1.03% 0.40% 0.24% 0.28% 0.17% 0.17% 0.16% 0.11% 0.11%
Earnings Before Tax ₹ 302.4 ₹ 474.7 ₹ 719.4 ₹ 1,134.3 ₹ 1,373.6 ₹ 1,684.8 ₹ 1,289.0 ₹ 1,950.5 ₹ 2,932.5 ₹ 3,314.9 ₹ 3,314.9
EBT % Sales 4.70% 5.53% 6.05% 7.55% 6.87% 6.77% 5.34% 6.30% 6.85% 6.53% 6.53%
Tax ₹ 110.9 ₹ 171.5 ₹ 268.3 ₹ 415.8 ₹ 519.5 ₹ 443.8 ₹ 384.0 ₹ 571.7 ₹ 681.8 ₹ 925.7 ₹ 925.7
Effective Tax Rate 36.68% 36.12% 37.29% 36.66% 37.82% 26.34% 29.79% 29.31% 23.25% 27.93% 27.93%
Net Profit ₹ 191.4 ₹ 303.2 ₹ 451.1 ₹ 718.5 ₹ 854.1 ₹ 1,241.0 ₹ 905.0 ₹ 1,378.8 ₹ 2,250.7 ₹ 2,389.2 ₹ 2,389.2
Net Margins 2.97% 3.53% 3.79% 4.78% 4.27% 4.99% 3.75% 4.45% 5.25% 4.70% 4.70%
No. of Equity Shares 56.15 56.15 62.41 62.41 62.41 64.78 64.78 64.78 64.83 65.07 0
Earnings per Share ₹ 3.4 ₹ 5.4 ₹ 7.2 ₹ 11.5 ₹ 13.7 ₹ 19.2 ₹ 14.0 ₹ 21.3 ₹ 34.7 ₹ 36.7 -
EPS Growth % 58.39% 33.85% 59.28% 18.87% 39.98% -27.07% 52.35% 63.12% 5.76% -100.00%
Retained Earnings 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 0.00%
x
Balance Sheet
Equity Share Capital ₹ 561.5 ₹ 561.5 ₹ 624.1 ₹ 624.1 ₹ 624.1 ₹ 647.8 ₹ 647.8 ₹ 647.8 ₹ 648.3 ₹ 650.7
Reserves ₹ 637.7 ₹ 958.9 ₹ 3,217.7 ₹ 4,045.0 ₹ 4,963.4 ₹ 10,432.0 ₹ 11,535.9 ₹ 13,029.9 ₹ 15,430.4 ₹ 18,047.1
Borrowings ₹ 904.3 ₹ 1,192.3 ₹ 1,497.3 ₹ 439.3 ₹ 700.2 ₹ 333.2 ₹ 392.7 ₹ 646.9 ₹ 643.0 ₹ 592.2
Other Liabilities ₹ 251.4 ₹ 388.8 ₹ 480.2 ₹ 539.9 ₹ 717.9 ₹ 663.2 ₹ 1,078.6 ₹ 1,146.4 ₹ 1,382.8 ₹ 1,887.2
Total Liabilities ₹ 2,354.8 ₹ 3,101.6 ₹ 5,819.3 ₹ 5,648.2 ₹ 7,005.5 ₹ 12,076.2 ₹ 13,655.1 ₹ 15,471.0 ₹ 18,104.5 ₹ 21,177.2
Fixed Assets Net Block ₹ 1,528.1 ₹ 2,093.5 ₹ 2,577.8 ₹ 3,400.0 ₹ 4,400.4 ₹ 5,948.0 ₹ 7,008.8 ₹ 9,260.0 ₹ 11,340.5 ₹ 13,415.0
Capital Work in Progress ₹ 98.1 ₹ 81.7 ₹ 152.9 ₹ 147.1 ₹ 376.8 ₹ 364.4 ₹ 1,019.6 ₹ 1,129.3 ₹ 829.2 ₹ 935.2
Investments ₹ 15.2 ₹ 29.3 ₹ 25.7 ₹ 68.2 ₹ 16.5 ₹ 14.7 ₹ 3.0 ₹ 5.9 ₹ 202.2 ₹ 106.7
Other Assets ₹ 128.7 ₹ 181.8 ₹ 209.8 ₹ 275.9 ₹ 319.7 ₹ 3,674.2 ₹ 1,886.3 ₹ 1,967.6 ₹ 1,018.7 ₹ 1,988.5
Total Non-Current Assets ₹ 1,770.1 ₹ 2,386.4 ₹ 2,966.1 ₹ 3,891.1 ₹ 5,113.4 ₹ 10,001.3 ₹ 9,917.6 ₹ 12,362.9 ₹ 13,390.6 ₹ 16,445.3
Receivables ₹ 7.1 ₹ 8.4 ₹ 21.0 ₹ 33.5 ₹ 64.4 ₹ 19.6 ₹ 43.6 ₹ 66.9 ₹ 62.2 ₹ 166.4
Inventory ₹ 539.6 ₹ 671.7 ₹ 947.9 ₹ 1,163.5 ₹ 1,608.7 ₹ 1,947.4 ₹ 2,248.3 ₹ 2,742.7 ₹ 3,243.5 ₹ 3,927.3
Cash & Bank ₹ 38.0 ₹ 35.1 ₹ 1,884.3 ₹ 560.2 ₹ 219.1 ₹ 107.9 ₹ 1,445.6 ₹ 298.6 ₹ 1,408.3 ₹ 638.2
Total Current Assets ₹ 584.7 ₹ 715.2 ₹ 2,853.2 ₹ 1,757.2 ₹ 1,892.1 ₹ 2,074.8 ₹ 3,737.4 ₹ 3,108.1 ₹ 4,714.0 ₹ 4,731.9
Total Assets ₹ 2,354.8 ₹ 3,101.6 ₹ 5,819.3 ₹ 5,648.2 ₹ 7,005.5 ₹ 12,076.2 ₹ 13,655.1 ₹ 15,471.0 ₹ 18,104.5 ₹ 21,177.2
x
Cash Flow Statements
Operating Activities
Profit from operations ₹ 474.0 ₹ 666.0 ₹ 984.0 ₹ 1,375.0 ₹ 1,659.0 ₹ 2,149.0 ₹ 1,764.0 ₹ 2,515.0 ₹ 3,659.0 ₹ 4,131.0
Receivables ₹ 2.0 ( ₹1. 0) ₹ 54.0 ( ₹13. 0) ( ₹31. 0) ₹ 45.0 ( ₹24. 0) ( ₹23. 0) ₹ 5.0 ( ₹104. 0)
Inventory ( ₹161. 0) ( ₹132. 0) ( ₹276. 0) ( ₹212. 0) ( ₹445. 0) ( ₹339. 0) ( ₹301. 0) ( ₹494. 0) ( ₹501. 0) ( ₹684. 0)
Payables ( ₹4. 0) ₹ 72.0 - ₹ 55.0 ₹ 146.0 ( ₹30. 0) ₹ 145.0 ₹ 11.0 ₹ 165.0 ₹ 231.0
Loans Advances ( ₹5. 0) - - - - - - - - -
Operating investments - - ( ₹2. 0) ( ₹62. 0) ₹ 52.0 ₹ 2.0 ₹ 12.0 ( ₹3. 0) - -
Other WC items ₹ 16.0 ( ₹7. 0) ( ₹46. 0) ( ₹11. 0) ( ₹72. 0) ( ₹54. 0) ₹ 41.0 ( ₹73. 0) ₹ 12.0 ( ₹87. 0)
Working capital changes ( ₹152. 0) ( ₹69. 0) ( ₹270. 0) ( ₹243. 0) ( ₹351. 0) ( ₹376. 0) (₹127. 0) ( ( ₹582. 0) ( ₹320. 0) ( ₹644. 0)
Direct taxes ( ₹100. 0) ( ₹164. 0) ( ₹258. 0) ( ₹403. 0) ( ₹502. 0) ( ₹492. 0) ₹262. 0) ( ₹560. 0) ( ₹709. 0) ( ₹742. 0)
Cash from Operating Activity ₹ 222.0 ₹ 434.0 ₹ 456.0 ₹ 729.0 ₹ 807.0 ₹ 1,281.0 ₹ 1,375.0 ₹ 1,373.0 ₹ 2,631.0 ₹ 2,745.0
Investing Activities
Fixed assets purchased ( ₹477. 0) - ( ₹645. 0) ( ₹916. 0) ( ₹1,417. 0) ( ₹1,712. 0) ( ₹2,029. 0) ( ₹2,410. 0) ( ₹2,212. 0) ( ₹2,731. 0)
Fixed assets sold - ₹ 2.0 ₹ 10.0 ₹ 7.0 ₹ 8.0 ₹ 6.0 ₹ 2.0 ₹ 21.0 ₹ 5.0 ₹ 9.0
Investments purchased ( ₹2,901. 0) ( ₹638. 0) - - - - - - ( ₹193. 0) -
Investments sold ₹ 2,904.0 - - ₹ 1,376.0 ₹ 410.0 ₹ 232.0 ₹ 3.0 ₹ 4.0 ₹ 6.0 ₹ 123.0
Investment income - ₹ 3.0 ₹ 8.0 - - - - - - -
Interest received - ₹ 1.0 ₹ 1.0 ₹ 31.0 ₹ 36.0 ₹ 12.0 ₹ 129.0 ₹ 43.0 ₹ 39.0 ₹ 262.0
Dividends received - - - - - - - - - -
Investment in group cos - ( ₹14. 0) ( ₹21. 0) ( ₹49. 0) - - - - - -
Redemp n Canc of Shares - - - ₹ 8.0 - - - - - -
Other investing items - ₹ 14.0 ( ₹1,835. 0) ₹ 7.0 ₹ 3.0 ( ₹3,194. 0) ₹ 786.0 ₹ 1,054.0 ₹ 42.0 ( ₹131. 0)
Cash from Investing Activites (₹474.0) (₹632.0) (₹2,482.0) ₹ 464.0 (₹960.0) (₹4,656.0) (₹1,109.0) (₹1,288.0) (₹2,313.0) (₹2,468.0)
Financing Activity
Proceeds from shares ₹ 33.0 - ₹ 1,841.0 - - ₹ 110.0 - - ₹ 15.0 ₹ 75.0
Proceeds from debentures ₹ 200.0 ₹ 350.0 ₹ 250.0 - - ₹ 300.0 - - - -
Redemption of debentures - - - ( ₹384. 0) ( ₹170. 0) ( ₹512. 0) ( ₹34. 0) - - -
Proceeds from borrowings ₹ 295.0 ( ₹60. 0) ₹ 260.0 - ₹ 992.0 ₹ 1,100.0 ₹ 200.0 ₹ 248.0 - -
Repayment of borrowings ( ₹232. 0) - ( ₹155.0) ( ₹695. 0) ( ₹562. 0) ( ₹1,550. 0) ( ₹204. 0) ( ₹248. 0) - -
Interest paid fin ( ₹62. 0) ( ₹93. 0) ( ₹120. 0) ( ₹80. 0) ( ₹51. 0) ( ₹98. 0) ( ₹44. 0) ( ₹54. 0) ( ₹67. 0) ( ₹58. 0)
Financial liabilities - - - - - ( ₹70. 0) ( ₹98. 0) ( ₹125. 0) ( ₹153. 0) ( ₹329. 0)
Application money refund - - - - - - - - ₹ 1.0 -
Other financing items - - ( ₹50. 0) - - ₹ 4,077.0 - - - ₹ 164.0
Net Cash Flow (₹18.0) (₹1.0) - ₹ 34.0 ₹ 56.0 (₹18.0) ₹ 86.0 (₹94.0) ₹ 114.0 ₹ 129.0
Yash Anand
DCF Valuation Summary for
Avenue Supermarts (DMart)
Overview
Avenue Supermarts, the parent company of DMart, is a prominent
player in the Indian retail sector, known for its large network of
hypermarkets. A Discounted Cash Flow (DCF) valuation model was
developed to estimate the intrinsic value of Avenue Supermarts'
stock, providing insights into its current market valuation.
Key Findings
Current Market Price: Rs. 4,472 (28/05/24)
Implied Share Price (DCF Valuation): Rs. 1,833.98
Market Premium: The stock is trading at a premium of 2.55x
compared to its implied intrinsic value.
Conclusion
The DCF model indicates that the intrinsic value of Avenue
Supermarts' share is Rs. 1,833.98. However, the current market
price is significantly higher at Rs. 4,472, suggesting that the stock is
trading at a premium of 2.55x. This discrepancy may be due to
market optimism, growth expectations, or other external factors
influencing investor sentiment.
Yash Anand