Motilal Oswal Financial Services

5 August 2020

Update

| Sector:

Retail

Avenue Supermarts

BSE SENSEX

37,663

S&P CNX

11,102

CMP: INR2,160

TP: INR2,000 (-7%)

Upgrade to Neutral

Preparing for normalcy; bringing back lost customers

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the Asiamoney Brokers Poll 2020 for

India Research, Sales and Trading

team. We

request your ballot.

DMart hosted its annual analyst call, discussing in detail the current business

environment, growth opportunity, online strategy, and means to combat the

resurgence of strong online players. DMart re-emphasized its uniqueness in terms of

right pricing and assortment. Furthermore, it highlighted creating a certain positioning

and customer affinity that is ensuring swift recovery from the pandemic-led lockdown.

Here are the key takeaways:

Swift recovery from lockdown

Stock Info

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

Free float (%)

DMART IN

624

1399.5 / 18.7

2559 / 1400

-10/5/42

1579

25.0

DMart has reopened most stores, and sales have reached ~80% across

assortments as customer traffic is gradually returning to stores given the brand’s

value offering. However, the profile of customers has changed to lower middle

and middle class v/s upper middle class, which is still wary of stepping out and

therefore prefers to shop online.

Growth trajectory remains strong

Same-store sales growth (SSSG) has fallen but is not concerning, excluding the

high base of last year and select low-performing stores. We think longer term

SSSG should normalize to the high single digits. Management indicated that in

terms of store adds, it aims to make up for the lost period of lockdown with ~59

store additions over FY21–22 (the next six quarters). The company has set

various targets for the coming year. A) It plans to add 70–80% stores in existing

markets given its better understanding and cost efficiency in these markets. B) It

would focus on larger sized stores, predominantly in semi-urban and lower tier

cities, that may have slightly sluggish metrics in the near term, but bring longer

term growth, operating leverage, premiumization, and thus ROIC. C) It would

continue property acquisitions unabated, as it did even in the last four months

of lockdown.

Financials Snapshot (INR b)

FY20 FY21E FY22E

Y/E March

Sales

248.7 272.2 368.3

EBITDA

21.3

20.3 30.4

Adj. PAT

13.0

12.8 19.5

EBITDA Margin (%)

8.6

7.4

8.3

Adj. EPS (INR)

20.1

19.8 30.0

EPS Gr. (%)

38.9

-1.2 51.5

BV/Sh. (INR)

177.5 198.1 229.3

Ratios

Net D:E

0.0

RoE (%)

15.6

11.0 14.6

RoCE (%)

15.5

10.9 14.5

Payout (%)

Valuations

P/E (x)

116.0 117.5 77.6

EV/EBITDA (x)

71.0

74.2 49.6

EV/Sales (X)

6.1

5.5

4.1

Div. Yield (%)

FCF Yield (%)

-0.3

0.4

-0.4

Shareholding pattern (%)

As On

Jun-20 Mar-20

Promoter

75.0

DII

6.0

6.6

FII

10.4

9.6

Others

8.6

8.8

FII Includes depository receipts

Online strategy and competition

The focus and presence of DMart Ready has increased over the last two years.

Management still believes in the growth opportunity of the brick-and-mortar

model, along with its cost and price competitiveness. It is cognizant of the scale

achieved by online players, their deep pockets, and their market-building ability.

However, it believes online is still restricted to the urban markets, where DMart

Ready offers both delivery and pick-up options at more attractive pricing v/s

online and would wait for the model to turn profitable. The company is agile

and could take price action in merely two hours, keeping track of competitor

pricing on a daily basis.

Jun-19

81.2

3.6

5.5

9.8

Would continue to pass on cost efficiency

Improving scale, assortment from larger sized stores, and supply chain efficiency

are aiding margin improvement. However, the company would continue to pass

it on to consumers to maintain the lowest cost / price competitiveness in the

market with both offline/online players.

Research Analyst: Aliasgar Shakir

(Aliasgar.Shakir@motilaloswal.com);

Suhel Shaikh

(Suhel.Ahmad@MotilalOswal.com) /

Anshul Aggarwal

(Anshul.Aggarwal@motilaloswal.com)

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Avenue Supermarts

Stock Performance (1-year)

Notes from peer online retailer BigBasket are astounding

Online players are growing significantly, with BigBasket’s monthly orders having

jumped to INR7.2–7.3b in Jul’20, i.e., ~INR90b annually, which is 30–50% of the top

offline grocery retailers. This indicates 3x growth v/s the last fiscal and 2x v/s Jan’20.

BigBasket is seeing very high customer retention, with a huge number of repeat

orders (creating customer loyalty) in grocery, typically the slowest to move online.

High-margin new categories, increased efficiency measures, and end-to-end

digitization are aiding profitability. The key point of contention is whether this

would sustain once normalcy resumes.

Consistent performer, but SSSG, ROIC may normalize

The massive growth opportunity in the Grocery space, coupled with DMart’s cost

competitiveness, provides huge runway for growth. While the pace of growth may

moderate due to the high scale, it could still achieve healthy growth of 20–25%.

With 5–10% revenue from new stores and SSSG moderation at 10–15%, revenue

and PAT should grow at 20–25% v/s ~30% in the last five years. The company

highlighted that fixed asset turnover has remained intact. However, capex/sq. ft. has

increased significantly by >4x in the last five years as we believe new stores may be

coming up in locations with higher real estate prices. With SSSG moderating and

capex/sq. ft. increasing, ROIC could moderate to the high teens from upwards of

20% previously.

Valuation and view

We value DMart at an FY22E EV/EBITDA multiple of 42x, maintaining TP of INR2,000.

The recent price correction, expectation of swift recovery post COVID-19, and

continued cost/price competitiveness should hold the company in good stead.

However, a) the growing scale of online retailers, including the prominence of deep-

pocket players such as Amazon and Reliance Retail, and b) the potential moderation

in growth and the return profile may restrict a re-rating. Thus, we value DMart at a

35% discount to the three-year average EV/EBITDA multiple of 65x, implying 7%

downside.

We upgrade from SELL to NEUTRAL.

5 August 2020

Avenue Supermarts

Analyst meet highlights

Key takeaways



Swift recovery post lockdown:

Operations are returning to normal, with ~95%

stores now allowed to sell all categories. Moreover, stores are now operational

for extended hours in certain areas. As a result, the company has reached ~80%

of stable-state revenue.

High store adds; focus on larger store size:

DMart indicated that to make up for

lost time, it would aim to open ~59 stores in FY21 and FY22. It plans to focus on

larger store sizes that would provide better margins, RoCE, and CAGR in the

longer run. Of these, 70–80% would be opened up in existing locations to bring

efficiency.

DMart Ready / E-Commerce:

Currently, DMart has 220 stores across Mumbai,

Thane, and Navi Mumbai and looks to achieve scale and profitability to expand

(viable only in larger towns). It remains highly price competitive and agile to

compete with online/offline peers and would expect offline to gain once

normalcy returns.

More of the same:

does not plan to enter the Wholesale business, increase

private label share, or grow margins (would pass benefit on to customer). It may

look to its own supply chain once it gains more scale and only move to leased

stores that offer 20- to 30-year leasing options.

Operational performance/metrics



FMCG outpaces non-FMCG:

In FY20, the contribution of FMCG products

increased in the company’s total revenue as FMCG seemed to perform better

than non-FMCG products in existing stores. This is because people who live near

the stores have a higher tendency to shop at the stores more frequently.

LTL growth:

DMart recorded LTL growth of 10.9% in FY20 v/s 17.8% in FY19 –

this appears higher due to the base effect of extremely high growth stores. Even

if we remove low-performing stores from this 10.9% growth, the performance is

not very different.

New stores:

DMart opened 38 new stores in FY20, reaching a total of 214

stores. Furthermore, it opened 70–80% of the stores in existing cities/states.

This provides better operating leverage and opportunity to increase the topline

as market demand is known.

Inventory/payable days:

Inventory and payable days were stable in FY20.

Asset turnover:

The fixed asset turnover ratio was also stable during the year.

Focus on larger store size



Higher area additions in FY20:

The area addition was higher in FY20 (1.9m sq.

ft.) as the size of the stores is consciously larger as smaller stores are reaching

high throughput faster, leading to a reduction in revenue/sq. ft.

Larger store size better for longer term:

Management indicated that larger

stores have lower throughput, but continue to grow for longer periods.

Furthermore, the capex/sq. ft. of larger stores is disproportionate. In the near

term, smaller stores are better as costs are lower, but in the longer term, large

stores provide better growth, margins, and RoCE.

5 August 2020

Avenue Supermarts



Strategy around large stores:

DMart does not have a different SKU strategy for

larger stores, but the stores have more space to display higher margin products

and also allow higher inventory storage. Furthermore, the management

indicated that the actual store size would depend on real estate cost, and it is

likely to have larger stores in small towns v/s metro cities.

New store openings:

Store additions would be muted in FY21 as four months

have already passed. However, the company would compensate for this in FY22

and is likely to open a total of ~60 stores in FY21 and FY22 to maintain the run-

rate.

Acceleration of store additions:

Acceleration happens in terms of land

acquisitions as there is a two-year lag from land acquisitions to store openings.

The company is very active in land acquisitions even during this crisis.

Impact of COVID-19 and recovery



Revenue impact:

Revenue was impacted due to store shutdowns and stores

being operational for minimal hours. Furthermore, the Apparel and General

Merchandise categories were closed for business even in the operating stores.

High density:

Company sales were impacted due to social distancing norms as

footfall in DMart stores generally remains at high density.

Shift to neighborhood stores:

Due to the lockdown, shoppers’ focus has shifted

to neighborhood

kirana

stores.

Margin dilution:

The major portion of margin dilution is attributed to the

company’s inability to sell high-margin apparel and general merchandise. It was

further impacted by its liberal incentive offerings to employees to motivate

them to work during the pandemic.

Resumption of operations:

~95% of DMart stores are now being allowed to sell

all categories. General Merchandise and Apparel are not performing at pre-

COVID-19 levels.

Change in customer mix:

DMart’s customer mix has changed, with the

contribution of low- and middle-income groups increasing, while the

contribution of higher income groups declining. This may lead to a reduction in

premiumization.

Likely revenue recovery:

Operations are returning to normal. Management

indicated that if the stores are allowed to operate at normal durations for a

longer period of time, DMart would be able to generate at least 80% of its pre-

COVID-19 revenue. Furthermore, margins would be largely the same in both the

pre- and post-COVID-19 eras.

Inventory:

DMart has very little perishable inventory. The concern is more

toward Apparel inventory as it could become obsolete.

Extended operating hours:

In certain areas, the company is allowed to keep

stores open for extended hours (from 6 AM or up to 11 PM) to manage the

crowds. Furthermore, stores are allowed to remain open for 24 hours in certain

locations.

DMart Ready and E-Commerce



Needs massive scale to be profitable:

DMart Ready’s operational scale is too

small to be profitable. To reach breakeven, it needs to primarily increase the top

line.

5 August 2020

Avenue Supermarts



Store throughput is too high to service online from stores:

DMart’s intensity of

revenue from the store does not allow enough room to scale the e-commerce

business as the offline business generates enough revenue to accommodate the

e-commerce business. Therefore, DMart would have to discontinue the delivery

business once stores resume operations.

DMart Ready stores:

The company has a total of 220 stores in Mumbai, Thane,

and Navi Mumbai.

Online opportunity:

Management believes there is an e-commerce opportunity

for the Grocery category only in large towns. Furthermore, it looks to explore e-

commerce only through DMart Ready, which would have both the pick-up and

home delivery options. Opportunity for DMart Ready is massive once the

company model turns profitable.

E-Commerce intensity likely to diminish:

Intensity of demand through e-

commerce would not sustain as the pandemic settles.

Ability to scale:

DMart is not pessimistic about the e-commerce opportunity due

to its inability. If customers were to start seeing e-commerce as the preferred

option, the company could scale the business in a short span of time.

Alignment with stores:

It is attempting to formulate a DMart Ready model that

is aligned with the brick-and-mortar model.

Premiumization:

The DMart Ready format is aiding premiumization as it allows

many customers who do not wish to come to DMart stores to shop from the

retailer through DMart Ready.

Cost metrics:

There are two components to cost: a) operational cost and b)

head office and technical cost. Currently, the company is looking to achieve

breakeven at the operational cost level and would later look at head office and

technical cost.

No new strategy



Wholesale business:

It has postponed the idea of the Cash-and-Carry business;

currently, the major focus is on the brick-and-mortar business and some on the

e-commerce business.

Private labels:

Management believes the pandemic is not a time to focus on

private labels as customers would prefer known brands in these times.

Backend integration:

DMart may explore supply chain ownership in the coming

two to four years. The company would like to wait to acquire a denser presence

before moving to the supply chain.

Store leasing:

The company is open to taking stores on lease, but seeks longer

lease durations, i.e., 20 to 30 years.

Margin outlook:

DMart seeks to maintain gross margins within the range of 15–

16% and pass the remaining benefit to customers. It has clear product-wise

margin guidelines.

Competitive intensity:

It was less aggressive in FY20 than in FY19. The company

would compete with online players on pricing. In the last couple of years, DMart

performed well despite an increase in price competition as the market size is

large. Furthermore, apart from pricing, assortment is DMart’s USP.

Pricing agility:

DMart is highly agile in terms of price action and can change

pricing in just a couple of hours. The technology is aligned to do this at a pan-

India level and across regions.

5 August 2020

Avenue Supermarts

Product assortment



Consumer durables:

The company is open to low price products in the Small

Appliance Home Durables category.

Risk associated with Chinese goods:

The contribution of Chinese components in

non-FMCG is insignificant and hence would not have any material impact on the

company’s product assortment.

Lower SKUs and sharp assortment:

DMart’s SKUs are lower than the industry

and it keeps a very sharp product assortment.

Quick product categories:

The company is continuously seeking revenue

opportunities from additional product categories as long as they align with the

company model, i.e., are quickly viewable, can be quickly analyzed, and have

quick pick-up.

Exhibit 1: Valuation based on FY21E EBITDA

EBITDA

Less Net debt

Total Value

Shares o/s (m)

CMP (INR)

Upside (%)

Methodology

FY22 EV/EBITDA

Driver (INR b)

Multiple (x)

Fair Value (INR b)

1,285

-11

1,296

648

Value/share (INR)

1,984

-16

2,000

2,160

-7

Source: MOFSL, Company

Exhibit 2: DMART: 1-year forward P/E

P/E (x)

Avg (x)

135

115

Min (x)

+1SD

119.0

102.5

85.3

49.4

68.2

Max (x)

-1SD

90.6

Exhibit 3: DMART: 1-year forward EV/EBITDA

EV/EBITDA (x)

Avg (x)

Max (x)

Min (x)

76.0

51.1

62.7

39.5

29.3

72.1

Source: Bloomberg, MOFSL

Exhibit 4: Revenue to witness robust 22% CAGR over FY20–22E

Revenue (INR b)

YoY growth (%)

51%

40%

37%

33%

39%

26%

119

150

33%

24%

200

249

272

368

35%

Source: MOFSL, Company

5 August 2020

Avenue Supermarts

Exhibit 5: Gross margin to decline 40bp in FY21E

Gross Profit (INR b)

Gross margin (%)

Exhibit 6:

EBITDA margin to decline 110bp in FY21E

EBITDA (INR b)

EBITDA margin (%)

6.3%

6.4%

3.2

4.8

7.0

9.5 12.8 18.2 24.0 30.0 37.7 40.0 57.0

1.4

2.2

7.3% 7.1%

7.7% 8.2%

9.0%

8.2% 8.6%

7.4%

8.3%

3.4

4.6

6.6

9.8 13.5 16.3 21.3 20.3 30.4

Source: MOFSL, Company

Exhibit 7: PAT to clock 21% CAGR over FY20–22E

PAT (INR b)

PAT margin (%)

5.4%

3.4%

3.3%

3.7%

4.0%

4.5%

5.2%

4.7%

5.3%

2.7%

2.8%

0.6

0.9

1.6

2.1

3.2

4.8

8.1

9.0

13.0

12.8

19.5

Source: MOFSL, Company

Exhibit 8: Revenue mix remains skewed (FY12)…

Foods

26.0%

Non-Foods (FMCG)

53.0%

21.0%

General

Merchandise &

Apparel

Source: Company, MOFSL

Exhibit 9: …towards Foods category (FY20)

Foods

27.3%

Non-Foods (FMCG)

52.4%

20.3%

General

Merchandise &

Apparel

Source: Company, MOFSL

5 August 2020

Avenue Supermarts

Exhibit 10:

Store additions to remain muted in FY21E

Total Store Count

New Stores

110 131 155 176 214 229 269

Exhibit 11: Five key markets account for 81% of total store

network (FY20)

Maharashtra

19%

36%

11%

Gujarat

Telangana

Karnataka

Andhra Pradesh

17%

Other region

Source: Company, MOFSL

Exhibit 12: ~One-fourth stores less than two years old (%)

Exhibit 13: Expect SSSG to decline in FY21E (%)

32%

26%

28%

42%

Less than 2 years

2-5 years

More than 5 years

20%

22% 22% 21%

14%

18%

11%

20%

31%

Source: Company, MOFSL

24 months SSSG

Source: Company, MOFSL

Exhibit 14: Total billings on a steep rise (m)

Total Bills Cuts (m)

201.0

171.8

84.7

108.5

134.4

Exhibit 15: Revenue/sq. ft. declines as store size increases

Revenue from sales per retail business area sqft (INR)

35,647

31,120

26,388

20,116

23,419

28,136

32,719

32,879

31.8

43.1

53.4

67.2

Source: Company, MOFSL

Exhibit 16:

Retail business area to show ~15% growth over FY20–22E

Total Retail Business Area (sqft m)

Area Additions (sqft m)

1.9

1.8

0.8

4.9

1.0

5.9

7.8

0.7

8.5

10.3

1.8

0.2

2.2

0.4

2.7

0.5

0.7

0.8

1.6

3.4

4.1

Source: Company, MOFSL

5 August 2020

Avenue Supermarts

Exhibit 17: Inventory days to remain steady at 35 days

Inventory days

Exhibit 18: Net WC days to remain steady near 30 days

Net WC days

Source: MOFSL, Company

Exhibit 19: Capex to decline in FY21E on muted store adds

Capex (INR b)

24.1

14.0

4.8

6.3

6.4

9.1

17.1

8.8

Exhibit 20: Return ratios to decline in FY21E

RoE (%)

25.0

20.0

15.0

RoCE (%)

RoIC (%)

10.0

5.0

1.8

2.4

2.7

0.0

Source: MOFSL, Company

5 August 2020

Avenue Supermarts

Financials and valuations

Consolidated – Income Statement

Y/E March

Total Income from Operations

Change (%)

Raw Materials

Gross Profit

Margin (%)

Employees Cost

Other Expenses

Total Expenditure

% of Sales

EBITDA

Margin (%)

Depreciation

EBIT

Int. and Finance Charges

Other Income

PBT bef. EO Exp.

EO Items

PBT after EO Exp.

Total Tax

Tax Rate (%)

Minority Interest

Reported PAT

Adjusted PAT

Change (%)

Margin (%)

FY14

46,865

40.3

39,845

7,020

15.0

873

2,729

43,448

92.7

3,417

7.3

570

2,847

557

158

2,449

835

34.1

1,614

71.9

3.4

FY15

64,394

37.4

54,879

9,515

14.8

1,341

3,592

59,811

92.9

4,583

7.1

815

3,768

724

183

3,226

1,109

34.4

2,117

31.2

3.3

FY16

85,838

33.3

73,035

12,802

14.9

1,490

4,676

79,201

92.3

6,636

7.7

984

5,652

913

179

4,918

1,715

34.9

3,202

51.3

3.7

FY17

1,18,977

38.6

1,00,810

18,167

15.3

1,925

6,429

1,09,165

91.8

9,812

8.2

1,278

8,534

1,220

286

7,600

2,683

35.3

129

4,788

49.5

4.0

FY18

1,50,332

26.4

1,26,356

23,976

15.9

2,826

7,622

1,36,804

91.0

13,528

9.0

1,590

11,938

595

693

12,036

4,158

34.5

-185

8,063

68.4

5.4

FY19

2,00,045

33.1

1,70,008

30,037

15.0

3,554

10,150

1,83,712

91.8

16,333

8.2

2,125

14,208

472

484

14,219

5,195

36.5

9,024

11.9

4.5

FY20

FY21E

2,48,702 2,72,237

24.3

9.5

2,11,029 2,32,280

37,673 39,957

15.1

14.7

4,561

5,526

11,829 14,156

2,27,419 2,51,963

91.4

92.6

21,283 20,274

8.6

7.4

3,744

4,299

17,539 15,975

691

225

600

946

17,448 16,696

4,438

4,216

25.4

25.3

13,009 12,480

44.2

-4.1

5.2

4.6

(INR m)

FY22E

3,68,340

35.3

3,11,313

57,026

15.5

7,698

18,896

3,37,907

91.7

30,432

8.3

5,091

25,342

225

355

25,472

6,368

25.0

19,104

53.1

5.2

Consolidated – Balance Sheet

Y/E March

Equity Share Capital

Total Reserves

Net Worth

Total Loans

Deferred Tax Liabilities

Lease Liabilities

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Goodwill

Right to use assets

Capital WIP

Total Investments

Curr. Assets, Loans&Adv.

Inventory

Account Receivables

Cash and Bank Balance

Loans and Advances

Curr. Liability & Prov.

Account Payables

Other Current Liabilities

Provisions

Net Current Assets

Deferred Tax assets

Appl. of Funds

FY14

5,468

4,088

9,556

6,408

265

16,229

13,969

2,252

11,717

888

155

5,316

3,783

554

884

1,847

1,226

533

3,469

16,229

FY15

5,615

6,377

11,992

9,043

305

21,340

18,321

3,041

15,281

981

152

7,134

5,396

380

1,287

2,208

1,185

843

179

4,926

21,340

FY16

5,615

9,589

15,204

11,923

399

27,527

21,918

983

20,935

817

293

8,970

6,717

351

1,818

3,488

1,944

1,487

5,482

27,527

FY17

6,241

32,177

38,418

14,973

505

53,898

27,764

2,260

25,504

1,529

531

30,629

9,479

210

18,843

2,097

4,295

2,607

1,605

26,334

53,897

FY18

6,241

40,450

46,691

4,393

452

51,541

37,223

4,006

33,217

783

1,471

682

20,330

11,634

335

5,602

2,758

4,942

3,173

1,642

127

15,387

51,541

FY19

6,241

49,634

55,875

4,298

633

60,811

49,352

6,131

43,221

783

3,768

165

22,118

16,087

644

2,191

3,197

9,246

4,633

4,474

139

12,872

60,811

FY20

6,478

1,04,320

1,10,797

2,248

474

744

1,14,268

60,127

8,603

51,524

783

7,173

34,871

147

26,264

19,474

196

1,079

5,516

6,497

4,335

1,996

167

19,767

1,14,268

FY21E

6,478

1,17,168

1,23,646

2,248

474

744

1,27,117

68,902

12,409

56,493

783

7,173

34,871

147

35,434

22,273

216

7,429

5,516

7,785

4,791

2,722

272

27,648

1,27,118

(INR m)

FY22E

6,478

1,36,630

1,43,107

2,248

474

744

1,46,579

93,004

17,023

75,981

783

7,173

34,871

147

37,542

29,852

292

1,882

5,516

9,920

6,421

3,131

368

27,622

1,46,579

5 August 2020

Avenue Supermarts

Financials and valuations

Ratios

Y/E March

Basic (INR)

EPS (diluted from FY17)

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

FCF per share

Return Ratios (%)

RoE

RoCE

RoIC

Working Capital Ratios

Fixed Asset Turnover (x)

Asset Turnover (x)

Inventory (Days)

Debtor (Days)

Creditor (Days)

Leverage Ratio (x)

Current Ratio

Interest Cover Ratio

Net Debt/Equity

FY14

3.0

3.9

17.5

0.0

FY15

3.8

5.2

21.4

0.0

FY16

5.7

7.5

27.1

0.0

FY17

7.7

9.7

61.6

0.0

303.7

239.7

37.9

12.2

147.8

0.0

-2.8

17.9

14.2

18.7

4.3

2.2

7.1

7.0

-0.1

FY18

12.9

15.5

74.8

0.0

180.4

150.6

31.1

9.7

107.4

0.0

-2.9

18.9

15.8

20.4

4.0

2.9

4.1

20.0

0.0

FY19

14.5

17.9

89.5

0.0

161.1

130.4

26.0

7.3

89.2

0.0

-9.5

17.6

16.8

18.3

4.1

3.3

2.4

30.1

0.0

FY20

20.1

26.8

177.5

0.0

116.0

86.8

13.1

6.1

71.0

0.0

-6.6

15.6

15.5

19.7

4.1

2.2

4.0

25.4

0.0

FY21E

19.8

26.7

198.1

0.0

117.5

87.3

11.8

5.5

74.2

0.0

8.7

11.0

10.9

15.1

4.0

2.1

4.6

73.2

0.0

FY22E

30.0

38.6

229.3

0.0

77.6

60.4

10.2

4.1

49.6

0.0

-8.8

14.6

14.5

19.9

4.0

2.5

3.8

114.8

0.0

-1.2

18.5

13.6

14.4

3.4

2.9

5.1

0.6

0.0

-4.1

19.6

14.0

14.3

3.5

3.0

3.2

5.2

0.7

0.0

-3.6

23.6

15.8

16.0

3.9

3.1

2.6

6.2

0.7

Consolidated – Cash Flow Statement

Y/E March

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

CF from Operations

Others

CF from Operating incl EO

(Inc)/Dec in FA

Free Cash Flow

(Pur)/Sale of Investments

Others

CF from Investments

Issue of Shares

Inc/(Dec) in Debt

Interest Paid

Dividend Paid

Others

CF from Fin. Activity

Inc/Dec of Cash

Opening Balance

Closing Balance

FY14

2,449

570

557

-750

-827

1,998

-17

1,981

-2,706

-724

-2,691

1,148

-552

652

-57

614

557

FY15

3,226

815

724

-1,000

-1,520

2,245

-25

2,220

-4,770

-2,549

-4,731

326

2,634

-621

2,345

-166

546

380

FY16

4,918

984

913

-1,642

-685

4,489

-154

4,335

-6,350

-2,015

-151

183

-6,318

2,898

-934

1,964

-19

370

351

FY17

7,600

1,278

1,220

-2,586

-2,697

4,815

-237

4,578

-6,354

-1,775

-229

244

-6,339

18,406

3,050

-1,203

20,253

18,492

351

18,843

FY18

12,036

1,590

595

-4,027

-2,427

7,767

-467

7,300

-9,087

-1,787

-247

383

-8,951

-10,791

-800

-11,591

-13,242

18,843

5,601

FY19

14,219

2,125

472

-5,018

-3,507

8,292

-224

8,068

-13,970

-5,902

400

-13,570

2,600

-510

2,090

-3,412

5,602

2,190

FY20

17,448

3,744

691

-4,924

-3,762

13,197

-395

12,801

-17,060

-4,259

-30,426

-47,486

41,869

-6,615

-682

-998

33,574

-1,111

2,191

1,080

FY21E

17,189

3,806

225

-4,340

-1,531

15,349

-946

14,403

-8,775

5,628

946

-7,829

-225

6,349

1,079

7,428

(INR m)

FY22E

25,948

4,614

225

-6,487

-5,520

18,780

-355

18,425

-24,102

-5,677

354

-23,748

-225

-5,548

7,429

1,881

5 August 2020

Avenue Supermarts

NOTES

5 August 2020

Avenue Supermarts

Explanation of Investment Rating

Investment Rating

Expected return (over 12-month)

BUY

>=15%

SELL

< - 10%

NEUTRAL

< - 10 % to 15%

UNDER REVIEW

Rating may undergo a change

NOT RATED

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within

following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.

Disclosures

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Specific Disclosures

1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.

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9 MOFSL has not received any compensation or other benefits from third party in connection with the research report

10 MOFSL has not engaged in market making activity for the subject company

********************************************************************************************************************************

5 August 2020

Avenue Supermarts

The associates of MOFSL may have:

- financial interest in the subject company

- actual/beneficial ownership of 1% or more securities in the subject company

- received compensation/other benefits from the subject company in the past 12 months

- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the

specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even

though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.

- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)

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- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.

The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report

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consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from

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Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website

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Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:

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* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National

Company Law Tribunal, Mumbai Bench.

5 August 2020