Avenue Supermarts came out with the results for Q1 FY20 in July. Let us have a quick look at the results. This is a very short review as the company did not provide a lot of details for Q1. Before we look into the results, I would recommend you to look at the below links.

Financial Analysis

Q1 FY20 (Crores) Q1 FY19 (Crores) Growth (%)
Revenue 5825.51 4589.36 26.93%
Expense 5318.64 4206.14 26.44%
PBT 506.87 383.22 32.23%
PAT 323.06 244.98 31.87%
  • Revenue: At27%, the revenue growth was good. The historical revenue growth is given below:
Q4 FY19 Q3 FY19 Q2 FY19 Q1 FY19 Q4 FY18
32% 33% 38% 26% 23%
  • EBITDA: The EBITDA grew by about 41% to 597 crores. The EBITDA margin was higher at 10.3% compared to 9.2% in Q1 FY19. Management believes this is an aberration on the higher side. The table below captures the EBITDA growth over the past few quarters.
Q4 FY19 Q3 FY19 Q2 FY19 Q1 FY19 Q4 FY18 Q3 FY18
28% 7.5% 23% 39% 42% 47%
  • PAT: PAT growth was satisfactory. The table below captures the PAT growth over the past few quarters. After close to three quarters the PAT growth has moved to the thirties.
Q4 FY19 Q3 FY19 Q2 FY19 Q1 FY19 Q4 FY18 Q3 FY18
21.5% 2.1% 18% 43% 73% 66%
  • The EPS growth was in line with PAT growth (as there was no equity dilution in the past year).
Q1 FY20 Q1 FY19 Growth %)
EPS 5.18 3.93 31.8

Expenses

Q1 FY20 (Crores) Q1 FY19 (Crores) Growth (%)
Purchase of Stock in trade 4928.63 4430.32 11.25%
Employee Benefit expense 100.39 81.27 23.52%
Finance Cost 18.15 10.04 80.77%
Other Expense 255.29 222.55 14.7%
  • Overall the expenses was much lower (and hence the higher EBITDA). What was interesting was the relatively lower growth in purchase of stock in trade compared to revenue growth. Neville acknowledged that gross margins were higher and he also cautioned that Q1 results are not reflective of the results for the entire year (one can interpret it both ways, but I am guessing he meant that margins are higher and they may trend downwards for the rest of the year)

Other Information

  • The company opened 9 stores in Q1 (which was mostly a spillover of FY19. In Q4 FY19, the management had informed that they could not open more stores due to delay in approvals). The company now has 184 stores with business area spread across 6.3 million square feet of space.
  • The company has used up most of the IPO money. A nominal amount of about Rs. 65 crores is left over.

Summary

  • Both Revenue and PAT growth was good in Q1.
  • The company was able to open 9 stores in Q1 which was mostly a spillover from Q4 FY19.

Overall the results were satisfactory

Disclaimer

I am not a SEBI registered research analyst. The information provided above is my subjective view based on what I have read on different websites, annual reports, and quarterly reports of various companies which I assume to be accurate. The above information should not be treated as an offer/advise to purchase a specific stock/investment instrument. Since these are my subjective opinions, I could be wrong in my understanding or presentation of information. I do not claim that the above information is complete or can be relied upon as such. I cannot be held responsible for any loss or damage caused due to any inadvertent error in the above information. I will not be liable for investment decisions made by readers of this article based on the above information. I am not an investment advisor. I may or may not have position in the above company. Please consult your investment advisor for all your investment needs.