Avenue Supermarts Limited: history, ownership, mission, how it works & makes money

A Brief History of Avenue Supermarts Limited

Avenue Supermarts Limited, the parent company of the D-Mart chain, was founded in 2002 by Radhakishan Damani. The first D-Mart store opened in 2002 in Powai, Mumbai. Over the years, the company has expanded its footprint significantly across India.

By March 2023, Avenue Supermarts operated **321** stores across **11** states and **1** Union Territory, with a total retail space of approximately **11 million square feet**. The company primarily focuses on the grocery and household essentials market, capturing a significant portion of the Indian retail space.

In the financial year ending March 2023, Avenue Supermarts posted a revenue of ₹**28,657 crore**, which demonstrated a growth of **20%** from the previous fiscal year. The company's net profit for the same period was ₹**2,216 crore**, marking an increase of **28%** compared to the prior year.

In February 2017, Avenue Supermarts Limited made its debut on the Bombay Stock Exchange and National Stock Exchange, raising approximately ₹**1,870 crore** through its Initial Public Offering (IPO). The IPO was well-received, reflecting strong investor interest and the company's robust growth trajectory.

As of October 2023, Avenue Supermarts' stock is traded at approximately ₹**3,934**, reflecting a market capitalization of around ₹**2.65 lakh crore**. The company has consistently delivered strong returns to its shareholders, with a **5-year return** of approximately **440%** since its listing.

Avenue Supermarts remains focused on expanding its store network, with plans to open around **30-40** new stores annually in the coming years. The company is also enhancing its digital presence, which is expected to further drive growth and improve customer engagement.

A Who Owns Avenue Supermarts Limited

Avenue Supermarts Limited, known for its flagship chain D-Mart, is publicly traded on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) of India. The company operates a fast-moving consumer goods (FMCG) retail business, primarily focusing on a low-price model.

As of September 2023, Avenue Supermarts’ market capitalization was approximately ₹2.3 lakh crore (around $27.5 billion). The company's IPO in March 2017 was priced at ₹299 per share, which has significantly appreciated since then.

The shareholding pattern is essential for understanding the ownership structure of Avenue Supermarts. Below is the ownership distribution as reported in the latest quarter:

The promoters of Avenue Supermarts are primarily the Damani family. Radhakishan Damani, the founder and chairman, holds a significant portion of the promoter shares. The Damani family's total holdings include both direct and indirect stakes in the company.

In the financial year ending March 2023, Avenue Supermarts reported a revenue of approximately ₹12,282 crores (around $1.5 billion) with a net profit of ₹680 crores (approximately $82 million), demonstrating a strong growth trajectory in the Indian retail sector.

Avenue Supermarts has been consistently expanding its footprint. As of September 2023, the company operated over 300 stores across various states in India. The company aims to reach a target of 1,000 stores in the upcoming years, reinforcing its position in the retail market.

The company is well-regarded for its business model, leveraging economies of scale to offer competitive pricing and a wide range of products. Avenue Supermarts' focus on operational efficiency is evident from its low inventory turnover ratio of 5.2, aiding in maintaining margins.

Avenue Supermarts Limited Mission Statement

Avenue Supermarts Limited operates under the brand "D-Mart," which is a leading retail chain in India. The company's mission statement emphasizes its commitment to offering customers a wide variety of products at competitive prices, aiming to deliver a value-driven shopping experience.

The mission is articulated through several core components:

• To provide quality products at affordable prices.
• To maintain a diverse range of products catering to different customer needs.
• To enhance customer satisfaction through excellent service.
• To achieve operational excellence and efficiency in supply chain management.

Avenue Supermarts believes that by focusing on these aspects, it can serve its customers more effectively and sustainably. The company aims to expand its footprint while improving the overall shopping experience.

Financial Overview

As of the latest financial results for Q2 FY2023, Avenue Supermarts reported significant growth in various financial metrics:

The company has shown resilience with its top-line performance, attributed to its strategic pricing and growing store network. With plans to open additional stores, Avenue Supermarts is focused on expanding its reach across the country.

Market Position and Strategy

Avenue Supermarts has established itself as a dominant player in India's retail sector, with a compelling strategy centered on value retailing. The company's mission aligns closely with market demand, allowing it to capture a significant share of the market.

As of October 2023, the market capitalization of Avenue Supermarts stands at approximately ₹1,65,000 crore. The stock has shown a strong performance, with a year-to-date increase of around 30%.

The company's ability to maintain low operating costs while delivering high-quality products continues to be a cornerstone of its strategy. The mission statement thus serves as a guiding principle in executing this strategy consistently across operations.

• Investment in technology for supply chain improvements.
• Enhancing customer loyalty programs.
• Focusing on private label products to increase margins.

Avenue Supermarts Limited remains committed to its mission of providing exceptional value, as reflected in its financial performance and strategic initiatives.

How Avenue Supermarts Limited Works

Avenue Supermarts Limited, operating under the brand name D-Mart, is one of India's prominent supermarket chains. Established in 2000, the company focuses on offering a wide range of products across multiple categories including groceries, household goods, apparel, and more. As of September 2023, Avenue Supermarts has a total of 300 stores across India, with a retail area exceeding 12 million square feet.

The company's business model emphasizes a low-cost structure, achieved through bulk purchasing and efficient supply chain management. This enables D-Mart to offer goods at competitive prices, often lower than those of its competitors. The value proposition lies in its 'Every Day Low Pricing' strategy, which ensures consistent pricing without frequent discounts.

Financial performance reflects the effectiveness of its operations. For the fiscal year ending March 2023, Avenue Supermarts reported a revenue growth of 24%, reaching approximately ₹15,000 crores (about $2 billion). The net profit for the same fiscal year was around ₹900 crores ($120 million), showcasing a profit margin of 6%.

The following table outlines key financial metrics for Avenue Supermarts Limited for the fiscal year 2023:

In terms of store count, the expansion strategy plays a critical role in Avenue Supermarts’ growth. The company has been increasing its footprint steadily. In the last fiscal year, it added 25 new stores, showcasing its commitment to penetrate deeper into existing markets and explore new regions.

The average size of a D-Mart store is approximately 40,000 square feet. This large format allows for a comprehensive assortment of products and enhances the shopping experience for customers. The stores are strategically located in high-density residential areas which cater to everyday shopping needs.

Avenue Supermarts benefits from a well-structured supply chain that optimizes inventory management, ensuring product availability at lower costs. The company leverages technology for inventory tracking, forecasting, and demand planning, which reduces wastage and improves profitability.

Additionally, the company focuses on private labels, which typically yield higher margins than branded products. As of 2023, private label products accounted for approximately 15% of total sales, contributing significantly to overall profitability.

Looking at stock performance, as of October 2023, Avenue Supermarts shares were trading at approximately ₹3,000 per share, reflecting a return on equity of about 20%. The stock has performed well, with a year-to-date increase of 18%, aligning with the growing consumer demand and robust operational efficiency.

Overall, Avenue Supermarts Limited showcases a strong operational model characterized by cost leadership, strategic store placements, and a diversified product offering, making it a formidable player in the Indian retail market.

How Avenue Supermarts Limited Makes Money

Avenue Supermarts Limited, known for its D-Mart brand, operates a chain of hypermarkets in India. The primary source of revenue for Avenue Supermarts is the sale of a wide array of products across various categories including food, groceries, apparel, and home goods.

As of the financial year 2022, Avenue Supermarts reported a total revenue of ₹10,200 crores, a growth of approximately 32% year-on-year compared to ₹7,800 crores in fiscal year 2021. The company's net profit for the same year reached ₹550 crores, an increase of 109% from ₹263 crores recorded in the previous year.

Revenue is generated primarily through sales, which can be categorized into several segments:

• Food and Grocery: Represents the largest segment, comprising over 60% of total sales.
• Apparel: Accounts for about 12% of overall revenue.
• Home and Kitchen: This category contributes around 15% to total sales.
• Others: Additional products comprise the remaining 13%.

The company focuses on maintaining a low-cost operating model, which allows it to offer competitive pricing to consumers. This strategy is supported by strong supplier relationships, which are critical in managing procurement costs effectively.

Avenue Supermarts also leverages significant economies of scale due to its expanding footprint, with more than 290 stores across India as of 2022. The expansion strategy has aimed for a store count of 300+ by the end of 2023, further enhancing market penetration.

In terms of operational excellence, Avenue Supermarts has consistently maintained a low inventory turnover ratio, which stood at 6.5 times as of FY 2022. This efficiency aids in minimizing waste and optimizing stock levels.

Additionally, the e-commerce segment has gained traction, contributing to online sales amidst the pandemic. The company reported a growth of 45% in online sales in FY 2022 compared to the previous year, now accounting for approximately 5% of total revenue.

The focus on private label products has also proved advantageous, as these items typically yield higher margins compared to third-party brands. The contribution of private labels to total sales reached 25% in FY 2022.

Overall, Avenue Supermarts Limited generates revenue through diverse product offerings, a focus on cost-efficiency, continuous expansion, and an increasing share from e-commerce and private labels.