The curious & inexplicable numbers of Avenue Supermarts (D’ Mart)

Every investor on this planet wants to strike as big as Buffett at some point in his life at least once. And this brethren is secular, always researching, thinking calculating and finding that one multi-bagger that would be life changing and altering. This cannot be denied that more money can / has been / could, be made in stock markets than any other asset class. As I write this piece, the evergreen “Gold” is down 4% which is seemingly huge for its safe-haven reputation.

So as Avenue trades at close to 130 times its trailing earnings, (in spite of the market meltdown) and much after and higher than its QIP at INR 2049 per share some numbers do solicit attention and analysis. 

Recently the promoter Sh. Radha Krishna Damani catapulted to be the second richest man in the country second only to Mr. Mukesh Ambani, with Avenue’s MarCap of 20.6 Bill USD, I was intrigued to learn that Avenue has only 200 stores pan-India each store enjoying a MarCap of 103.3 Mill USD. (InR 775 Crores per store)

For the record, Walmart has 11500 (57.5 times Avenue) Stores, does an annual sale of 520 Bn USD (165 times Avenue), and MARCAP of 333 Bill USD (just 16 times Avenue) and trading at a PE of 22 with a Div Yield of approx. 2%

Avenue's Sales grew between FY16/17/18/19/ @ 39%/26%/33%/18% respectively YOY so on an average they grew at 29% YOY and by that run-rate it should be clocking annual sales of 50000 Cr or 6.66 Bill US$ in FY 22-23

The shareholders, of a company that hasn’t decided to start paying dividends inspite of this stellar performance will have to depend on capital appreciation of stock and hypothetically recover their investment in ~130 years (if EPS of Rs. 19.56 was to remain constant).

Now lets look at the numbers:

• Avenue Has 200 stores
• Opens for 11 hrs a day approx.
• If the rush / customer inflow /outflow is on a bell curve pattern, peak operation hrs could be considered at 6-7/day but we still take 11 hrs for the purpose of liberal brevity
• @23500 Cr of annual rev it does 118 Cr per store per annum
• Or 32.43 lacs per/day per store
• And if the store is open for 11 hrs it would be 2.95 lacs  per hr per store
• And at ticket size of say 1500/customer
• D’Mart is through putting 196 customers per hour per store in its 11 hr shift
• Or
• Say 3.28 customers per minute/store across the entire chain of 200 stores, without a moment’s pause, each customer spending Rs 1500 in a matter of a few mins per till.

That’s a bit of a statistic and efficiency for an Indian company and it reminisces the memories of another company that wanted to sell its mango juice to every Indian and was a market darling of many Mutual Funds and Asset Managers for the longest period of time.

And By Jove, with these numbers and efficiency, Avenue deserves a valuation of 1000 PE and not just 115 because then Jeff Bezos should be applying for a job as an apprentice with Avenue Supermarts.

Investors / Shareholders / Customers if You cannot get out of D'Mart after shopping for a min of Rs. 1500 within 18.29 seconds, You are just wasting someone's time. 

Disclaimer:

No share ever bought in Avenue/No personal interest thru any entity personal or related