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Revenue growth in line with improving productivity

Revenue grew 18% YoY; revenue per store/sqft up 5%/3% YoY

* Standalone revenue grew 18% YoY to INR118.8b (in line). This is largely contributed by 11% YoY growth in store additions with revenue per store up 5% QoQ sqft to INR1,424m (annualized), 11% above pre-covid levels. Revenue/sqft was up 3% YoY to INR34,388/sqft (5% below precovid levels of INR36k per sqft), seeing signs of bottoming (after being flattish in the last three quarters). The lower revenue/sqft is due to increasing size of the stores, which may take longer to reach a stable revenue per sqft state.

* Our channel checks indicate continued soft performance in the value segment, which could still be negatively impacting the 25-30% discretionary category. However, we see indications of value segment bottoming, and we expect a better performance in 2HFY24 due to several factors: a.) prolonged weak demand, b.) the potential for falling RM prices to be passed on to improve demand, and c.) certain market segments already discussing an improving demand scenario.

* The average store size has grown by 24% to ~41.5k sq. vs. 33.5k sq.ft in FY20. The management has previously indicated that the higher store size takes longer to reach a stable state revenue/sqft.

Store additions remain soft

* DMART added 3 new stores (vs. 10 stores in 1QFY23), taking the total count to 327.

* It has added 50/40 stores in FY22/FY23 and we expect another 45 new stores to be added in FY24, which are typically back-ended in 2HFY24. This may lead to a store count of 369 by year-end.

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