8 June 2023

Update | Sector: Retail

Avenue Supermarts
BSE SENSEX S&P CNX
62,849 18,635 CMP: INR3,547 TP: INR4,200 (+18%) Upgrade to Buy
Well placed for earnings revival
Motilal Oswal values your support in
the Asiamoney Brokers Poll 2023 for DMART has grown its revenues and earnings at a robust CAGR of 23% and 24% over the
India Research, Sales, Corporate
last five years. After growing the topline at this scorching pace and achieving a turnover
Access and Trading team.
We request your ballot. of INR 430b, it has just about scratched the surface in our view. We believe it has a long
runway for growth as the modern retail space is still in its infancy in India. Weak SSSG has
weighed on DMART’s stock price performance in the recent past. In this report, we
highlight key catalysts that can accelerate the growth from hereon and discuss our thesis
for Rating upgrade.
Strong footprint addition in last few years
While most retailers found it difficult to expand their footprint in the last three
years due to Covid, DMART, despite operating on an ownership model, clocked a
Stock Info
Bloomberg DMART IN strong 20% CAGR in area addition over FY20-23, translating into 19% revenue
Equity Shares (m) 648 growth. However, SSSG was weak due to: 1) the addition of big stores in the last
M.Cap.(INRb)/(USDb) 2304.9 / 27.9 few years (average store size up 23% over FY19-23), which pulled down store
52-Week Range (INR) 4606 / 3293 productivity; and 2) weak discretionary demand in the value category, which
1, 6, 12 Rel. Per (%) -6/-12/-19 reduced its share to 23% from 27% in FY20., However, we believe SSSG is set to
12M Avg Val (INR M) 1400
recover in FY24, due to the following factors: 1) easing general inflation, along with
Free float (%) 25.1
RM cost reduction, may help to revive discretionary demand; 2) a change in the
Financials Snapshot (INR b) company’s store strategy — earlier smaller 30-35k sqft stores would mature in 3-4
Y/E March FY23 FY24E FY25E
years and see their SSSG peak out, so the company has started to open larger
Sales 428 536 689
EBITDA
stores since FY19/20, which continue to contribute even after completing their 3-4
36 47 63
Adj. PAT 24 29 40 year cycles. Those stores are now in the base and will start contributing to store
EBITDA Margin (%) 8 9 9 productivity, with further room to grow footfalls.
Adj. EPS (INR) 37 45 61 Good cost control in weak SSSG environment
EPS Gr. (%) 59 23 35 Despite weak SSSG, DMART has managed to protect its EBITDA margin, unlike
BV/Sh. (INR) 258 305 368
other retailers, which have seen a 200-450bp margin hit. DMART is one of the few
Ratios
Net D:E 0 0 0 retailers to have retained cost efficiencies achieved during the Covid period and
RoE (%) 16 17 19 benefited from the economies of larger stores. Gross margin was affected by the
RoCE (%) 16 16 19 softness in the margin-accretive discretionary category, offsetting price inflation
Payout (%) 0 0 0 gains. Yet, it has managed to achieve EBITDA margin closer to the normal pre-Covid
Valuations
level. This is evident from its SG&A and employee costs, which declined 2% per sqft
P/E (x) 96 78 58
EV/EBITDA (x) 63 49 36
over FY20-23 to INR2,264 in FY23, cushioning the 2% drop in revenue productivity.
EV/Sales (X) 5 4 3 When SSSG recovers, strong cost control could help DMART improve its margin by
Div. Yield (%) 0 0 0 30-50bp or pass on the gains to drive higher offtake.
FCF Yield (%) 0 0 1
Competitive position intact
Despite the recent aggressiveness of online/quick commerce platforms, DMART
remains one of the most competitive grocery retailers, along with JioMart (Reliance
Fresh), with 6% lower pricing (vs. average basket value of nine players) consistently
over the last 12 months. As per our monthly grocery price monitor, in May’23,
DMART at INR8,500 (basket value) was marginally above JioMart but was 8%
cheaper than the pure-play online retailers (such as Zepto, Dunzo, Big Basket, etc.)
highlighting its cost competiveness against the aggressive online players. As per our
price monitor, four times in the last 12 months, it had the cheapest basket value
with the widest breadth of the lowest price products. This looks commendable, as
DMART has protected its margins, yet maintaining its competitive edge.
Aliasgar Shakir - Research Analyst (Aliasgar.Shakir@motilaloswal.com)
Research Analyst: Tanmay Gupta (Tanmay.Gupta@motilaloswal.com) | Harsh Gokalgandhi (Harsh.Gokalgandhi@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

Shareholding pattern (%) Online business – not burning cash but well prepared
As On Mar-23 Dec-22 Mar-22 DMart Ready has expanded its footprint to 22 cities with store metrics that are close
Promoter 74.9 75.0 75.0 to breakeven. It operates on the next-day delivery model, unlike other quick-service
DII 7.5 7.1 6.8 e-grocers, which have lower fill rates and delivery size, mostly catering to daily
FII 8.2 8.6 8.8
needs instead of monthly grocery orders. As per Redseer, the online industry
Others 9.4 9.3 9.4
reached a sizeable USD8b scale in 2022 and is expected to see a 33% CAGR over
FII Includes depository receipts
2022-2025 (reaching USD19b by 2025), but most online players have found it
Stock Performance (1-year)
difficult to achieve profitability. DMart Ready, on the other hand, has a well-
managed model. Although it has not grown rapidly due to weak economics in the
online business, it is prepared for any growth opportunities.

Long runway for growth

DMART’s well-oiled business model with a strong focus on low procurement costs,
cost savings from supply chain efficiencies and rental savings through the ownership
model has created a deep moat and a virtuous cycle of growth. In the food and
grocery business with wafer-thin margins (15% gross margin), this helps create a
highly competitive offering, thus pushing store productivity much ahead of peers
and offering a long runway for growth. We believe DMART’s SSSG and earnings
revision cycle are closer to bottoming out. Tailwinds from robust store additions and
consistent cost efficiency could play a key role in SSSG recovery. Subsequently, we
estimate a revenue/PAT CAGR of 27%/29% over FY23-25.

Healthy balance sheet and cash flow

DMart’s new stores in many virgin markets with an ownership model need lower
investments and allow it to leverage growth for the long term. The lean working
capital cycle and asset turns have enabled it to garner 18-20% ROIC consistently
over the last five years (barring COVID impact). Its healthy annual OCF of INR11.7b/
INR21.8b in FY24E/FY25E should help to add 16% footprint through internal
accruals, thus offering a self-funded long runway for growth.

Valuation and view: Reaching closer to sanity

DMart’s remarkable consistency in achieving industry-leading growth, margins and
ROCE despite having a relatively asset-heavy model warrants rich valuations. In the
last five years, it has traded at 60x EV/EBITDA and 99x PE. After a 25% correction
since Sept’22, DMART is now trading at 36x EV/EBITDA and 58x PE on FY25E, which
represents a 30% discount to historical multiples. This is mainly attributed to weak
SSSG in the recent past. We believe that concerns about a growing online grocery
market are unwarranted, as the share of both online and modern retail is miniscule
in the total grocery market, and the market opportunity is huge. We believe SSSG
improvements in FY24 should boost valuation multiples. We value DMART at 40x
FY25E EV/EBITDA and an implied P/E of 64x on Jun’25 to arrive at a TP of INR 4,200.
This reconciles with our three-stage DCF valuation, building long-term cash flows
and assuming a 4% terminal growth rate and 11.5% cost of capital. We upgrade the
stock to BUY.

8 June 2023 2
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Exhibit 1: Valuation based on Jun’25E EBITDA

Driver Multiple Fair Value Value/share
Methodology
(INR b) (x) (INR b) (INR)
EBITDA EV/EBITDA 67 40 2,696 4,169
Less Net debt -20 -31
Total Value 2,716 4,200
Shares o/s (m) 648
CMP (INR) 3,547
Upside (%) 18
Source: MOFSL, Company
Exhibit 2: Implied PE
Implied PE Methodology Driver (INR b) Multiple
EPS (INR) June'25 EPS 66 64
Target Price (INR) 4,200
Source: MOFSL, Company
Exhibit 3: DMART: 1-year forward P/E Exhibit 4: DMART: 1-year forward EV/EBITDA
P/E (x) Avg (x) Max (x) EV/EBITDA (x) Avg (x) Max (x)
Min (x) +1SD -1SD Min (x) +1SD -1SD
180
149.3 100 94.7
140 123.6 76.5
80
99.2
100
60
49.4 60.0
60 70.7 40 43.5 29.3 43.9
74.8
20 20

Nov-21
Apr-18

Apr-19

Apr-20

Apr-21

May-22

May-23

Mar-17

Apr-18

Apr-19

Apr-20

May-21

May-22

Nov-22

May-23
Mar-17

Oct-17

Oct-18

Oct-19

Oct-20

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

Exhibit 5: Snapshot of Retail coverage
Revenue EBITDA PAT ROE ROCE
M.Cap TP Up/ P/E EV/EBITDA
Reco (INR b) margins (%) (INR m) (%) (%)
(INR b) (INR) downside
Retail FY24EFY25E FY24EFY25E FY24E FY25E FY24EFY25E FY24EFY25E FY24EFY25E FY24EFY25E
DMART Buy 2,298 4,200 18% 536 689 8.8 9.1 29,33239,706 16.7 18.9 16.4 18.5 78.3 57.9 48.8 36.4
Apparel
Trent Buy 565 1,835 15% 108 137 14.6 14.9 7,784 10,430 26.1 26.8 13.9 14.8 72.6 54.2 38.1 29.7
ABFRL Neutral 192 235 16% 148 173 13.3 13.9 317 806 0.8 1.7 6.4 6.7 644.9 253.6 13.1 11.3
VMART Buy 40 2,375 18% 29 35 12.5 13.2 536 1,249 6.1 12.9 6.4 9.5 95.3 40.9 17.1 13.4
Shoppers Stop Neutral 109 705 -10% 46 52 18.0 18.5 1,739 2,366 54.5 45.1 12.5 13.3 37.5 27.6 12.5 10.5
Vedant Fashions Buy 311 1,435 12% 16 20 50.2 50.3 5,198 6,360 19.2 26.8 33.4 33.4 57.9 40.0 37.4 30.7
Footwear
Metro Brands Buy 262 1,070 11% 26 33 29.4 31.3 4,047 5,448 24.2 27.6 16.9 18.7 64.9 48.2 34.6 26.1
Campus Activewear Buy 98 425 33% 17 21 18.8 21.1 1,633 2,342 22.8 24.7 19.9 22.4 59.8 41.7 30.0 22.1
Relaxo Neutral 224 810 -10% 32 39 14.9 16.5 2,605 3,631 13.3 16.6 12.6 15.5 86.0 61.7 46.4 34.7
Bata India Neutral 203 1,660 5% 39 44 13.9 16.1 4,052 5,259 24.7 25.0 16.8 18.1 50.2 38.7 22.2 18.7
QSR
Devyani Buy 219 200 10% 39 48 23.5 23.8 3,292 4,309 29.4 30.5 16.3 17.3 67.8 51.6 23.7 18.9
Sapphire Buy 89 1,585 14% 29 35 19.8 20.6 1,374 2,040 10.4 13.6 9.9 11.4 64.5 43.5 15.0 11.4
Jubilant Buy 321 560 15% 57 65 22.8 24.4 4,461 5,975 18.0 25.1 12.1 14.0 71.9 53.7 23.7 19.7
Westlife Neutral 127 800 -2% 27 32 16.6 17.0 1,464 2,033 22.9 25.0 11.6 13.1 86.7 62.4 30.9 25.3
Barbeque Neutral 26 700 7% 14 16 19.0 19.5 398 511 9.0 10.4 7.8 8.8 64.4 50.1 11.6 9.7
Source: MOFSL, Company

8 June 2023 3
 Avenue Supermarts

Strong footprint addition in last few years

 DMART has reported a 19% revenue CAGR over FY20-23, supported by 20% area
addition and 15% store addition. With an improvement in the discretionary
segment and more stores maturing (34% stores added during the last three
years including two Covid impacted years), we expect these stores will add more
value to revenue over FY23-25 since older stores are doing better.
 Mature stores doing well: Before the pandemic, DMART reported SSSG of 20%+
YoY in stores older than 24 months. The company reported that stores older
than two years saw 24.2% SSSG YoY in FY23.
 The reasons behind low SSSG could be subdued demand in the discretionary
portfolio and larger store size. The company’s average store size has increased
to 41k sqft from a mere 34k sqft in FY20.
 The company is in the process of commencing a pharmacy shop-in-shop
business at one of its stores through a subsidiary, Reflect Healthcare and Retail
Private Limited. This is yet another pilot that will complement the brick-and-
mortar business, leveraging the existing store infrastructure.

Exhibit 6: Revenue growth in FY20-23 led by area addition Exhibit 7: Expect Rev/store and Rev/sqft to grow in FY23-25E
Revenue Store count Area (m sqft) Rev/sqft (INR) Rev/store (INRm)
11%
27%
9%
20% 20%
16%
15% 14% 3%

-2%

FY20-23 FY23-25 FY20-23 FY23-25

Source: MOFSL, Company Source: MOFSL, Company

Exhibit 8: 15%/20% store/area added during FY20-23, Exhibit 9: Subdued demand and large stores have affected
expect 14%/16% store/area add in FY23-25E Rev/sqft; expected to recover FY24E onward

Area (m sqft) Store count Rev/sqft (INR) Rev/store (INRm)

419
1,706
369
1,508
324 1,376
284 1,203 1,265 1,172
234 1,050 1,062
214
155 176
36,882
33,353

36,022

28,659

29,904

33,601

35,969

39,785
11.5

13.4

15.7

18.2
4.9

5.9

7.8

8.8

FY19
FY18

FY20

FY21

FY22

FY23

FY24E

FY25E
FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

Source: MOFSL, Company Source: MOFSL, Company

8 June 2023 4
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Exhibit 11: Revenue FY20-23 CAGR; total revenue supported

Exhibit 10: Revenue CAGR over FY18-20 across verticals by Food and FMCG segment
Total revenue Food FMCG GM & A Total revenue Food FMCG GM & A

29% 30% 29% 23% 21%

26% 20%
13%

6% 4%
3%
10% 11% 11% 0%
8%
4% 5% 5%
2% -1%
-2% -2%
-7%
Absolute per sqft per store Absolute per sqft per store

Source: MOFSL, Company Source: MOFSL, Company

Exhibit 12: Bill Cuts productivity much below pre-Covid level

vs pre-
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Covid
(FY20)
Bill cuts (m) 43 53 67 85 109 134 172 201 152 181 258
YoY 23.9 25.8 26.0 28.1 23.5 28.4 16.9 -24.4 19.1 42.5 28.4
Bill cuts per store (in k) 695 780 820 851 900 937 1,039 1,031 679 699 849
YoY 12.1 5.1 3.9 5.8 4.1 10.9 -0.8 -34.2 3.0 21.4 -17.7
Bill cuts per sqft 24 27 28 28 29 30 32 29 18 18 21
YoY 12.1 3.1 1.8 3.9 2.2 7.0 -7.9 -37.6 -2.6 16.2 -29.4
ABV (INR) 775 877 957 1012 1095 1120 1158 1228 1565 1677 1621
YoY 13.1 9.2 5.7 8.2 2.3 3.4 6.0 27.5 7.2 -3.3 32.1
Source: MOFSL, Company

Good cost control in weak SSSG environment

 The company has a track record of keeping expenses under control.
 Historically, the gross margin has remained near 15%, even in the Covid
period.
 During FY20-23, the cost of retailing (COR)—where a majority of expenses
are fixed in nature—was under control, in line with the revenue/GP CAGR.
 On the YoY basis, we have seen the company’s ability to control the cost, as
revenue grew by 38% in FY23, while the COR grew by 35% in absolute terms
(when revenue was subdued and most of the costs were fixed).
 On the per sqft basis, the COR grew by 10% YoY and on the per store basis,
it grew by 15% YoY (vs. 17% increase in sales per store YoY).
 With the costs remaining under control, we expect a revenue CAGR of 27% and
a COR CAGR of 24% over FY23-25.
 Hence, with ~15% GM and controlled COR, we expect a PAT CAGR of 29% over
FY23-25.

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Exhibit 13: Cost management- COR growth is less/flat compared with Revenue/GP growth
FY22-23 FY20-23 FY23-25 FY18-23
FY20 FY21 FY22 FY23 FY24E FY25E
YoY (pre-Covid) (expected) (historical)
Revenue (INR b) 249 241 310 428 536 689 38% 20% 27% 23%
YoY (%) 24% -3% 28% 38% 25% 29%
Rev/sqft (INR) 36,022 28,659 29,904 33,601 35,979 39,785 12% -2% 9% 0%
YoY (%) -2% -20% 4% 12% 7% 11%
Rev/store (INR m) 1,265 1,062 1,172 1,376 1,508 1,706 17% 3% 11% 6%
YoY (%) 5% -16% 10% 17% 10% 13%
GP (INR b) 38 36 46 65 81 106 41% 20% 28% 22%
YoY (%) 25% -5% 28% 41% 26% 30%
Gross margin 15.1% 14.9% 14.8% 15.1% 15.2% 15.4%
GP/sqft (INR) 5,500 4,323 4,511 5,185 5,607 6,286 15% -2% 10% -1%
YoY (%) -1% -21% 4% 15% 8% 12%
GP/store (INR m) 193 160 177 212 235 270 20% 3% 12% 5%
YoY (%) 6% -17% 10% 20% 11% 15%
Cost of Retailing (INR b) 16 18 21 28 35 44 35% 20% 24% 22%
YoY (%) 20% 13% 13% 35% 23% 26%
Cost of Retailing /sqft (INR) 2,393 2,223 2,050 2,264 2,378 2,582 10% -2% 7% -1%
YoY (%) -6% -7% -8% 10% 5% 9%
Cost of Retailing /store (INR m) 84 82 80 93 100 111 15% 3% 9% 5%
YoY (%) 2% -2% -2% 15% 8% 11%
EBITDA (INR b) 21 17 25 36 47 63 46% 20% 31% 22%
YoY (%) 30% -18% 43% 46% 29% 33%
EBITDA Margin 8.6% 7.2% 8.1% 8.5% 8.8% 9.1%
EBITDA /sqft (INR) 3,107 2,100 2,462 2,921 3,229 3,704 19% -2% 13% -1%
YoY (%) 3% -32% 17% 19% 11% 15%
EBITDA/store (INR m) 109 78 96 120 135 159 24% 3% 15% 5%
YoY (%) 11% -29% 24% 24% 13% 17%
Source: MOFSL, Company

Exhibit 14: Inventory days expected to remain near 34 days Exhibit 15: Net WC days remain within range

Inventory days Net WC days

40 31
38 30
36 28
34 34 34 35 34 34 34 26 27 27
33 26 25 26 26
24
FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

Source: MOFSL, Company Source: MOFSL, Company

8 June 2023 6
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Ownership model - Winning against the tide

Unlike the leased store model adopted globally to achieve scale, DMART has chosen
the owned store model. Though owned stores have a longer payback period,
DMART has achieved healthy scale without severe pressure on the balance sheet.
This model has enabled it (a) to keep operating cost low, allowing high sales velocity
and store productivity, (b) to de-risk itself from store churn due to the lease model,
allowing it to take advantage of a store’s best years of profitability (RoCE of ~25%
from the fifth year), and (c) to open stores in clusters, resulting in scale-related
supply chain and marketing cost benefits, as well as higher brand recall. The lease
model has better ROCE on paper given the low capex requirement, but in the
ownership model, the benefits in terms of store productivity and inventory churn go
unnoticed, which create a sticky competitive edge over the long term of the
business.

Exhibit 16: DMART’s RoCE generation over store lifecycle (INR m per store)
Year of Operation 1 2 3 4 5 6 7 8 9 10
Sales Capacity (new store Trajectory) 40% 60% 80% 100% 110% 113% 118% 124% 131% 138%
Sales 399 599 799 998 1,098 1,128 1,178 1,238 1,308 1,378
Gross Margins % 13% 13% 14% 14% 15% 15% 15% 16% 16% 16%
GM 52 80 110 144 167 174 182 192 204 217
Operating Costs 71 74 77 80 83 87 90 94 97 101
Growth in Op expenses 4% 4% 4% 4% 4% 4% 4% 4% 4%
EBITDA (excl. rent) (20) 6 32 64 84 87 92 99 107 115
margin -5% 1% 4% 6% 8% 8% 8% 8% 8% 8%
Pre Tax Cash RoCE % - Tier 1 -5% 2% 9% 18% 23% 24% 26% 27% 30% 32%
Pre Tax Cash RoCE % - Tier 2 -9% 3% 15% 31% 40% 41% 44% 47% 51% 55%
Source: MOFSL, Company

Pricing monitor- DMART among the cheapest selling players

We have been running the pricing monitor for the last several months and have
identified some notable things:
1. The pure-play online players (such as Bigbasket, Amazon pantry, etc.) are 8%
costlier than the traditional offline players (DMART, JioMart, etc). This suggests
that DMART is maintaining price competitiveness (Exhibit 17).
2. We saw almost flat impact of inflation on prices of the staples basket from
May’22 to May’23, but prices of the HPC basket increased 15% (Exhibit 16).
3. In total DMART revenue, the staples segment contributes 56%, FMCG
contributes 21%, and General Merchandise and Apparel contributes 23%.

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Exhibit 17: Price movement in the Staples and HPC baskets in last 12 months

Food and staples HPC

117.8 116.8
115.4 115.0
113.2 112.6 113.4
108.6
105.7
101.6 102.9
100
96.9
104.4
100 99.9 99.5 100.3 101.4
98.6 99.0 98.3 98.7 98.6
95.8 95.9
May'22

May'23
Aug'22

Sep'22

Dec'22

Jan'23

Feb'23

Mar'23

Apr'23
Oct'22
Jul'22
Jun'22

Nov'22
*Rebased to 100, Source: MOFSL

Exhibit 18: Price monitor- DMART/JioMart among the cheapest

DMart Amazon Flipkart Star
Adjusted basket amount JioMart Big Basket Blinkit Dunzo Zepto Instamart
Ready Pantry Supermart Quik
May'22 8,002 8,195 8,343 9,297 9,238 8,576
June'22 7,974 8,313 8,169 9,255 8,547 8,238
July'22 8,110 8,272 8,064 9,303 9,592 8,681
Aug'22 8,250 8,407 8,416 9,951 8,472 8,513 10,135 8,738 9,346
Sep'22 8,340 8,199 8,800 9,301 8,304 8,892 9,151 9,086 9,188
Oct'22 8,399 8,740 8,529 9,869 8,424 9,202 9,139 8,795 9,548
Nov'22 8,879 8,546 8,929 9,731 8,617 9,170 9,999 9,734 9,167
Dec'22 8,807 8,472 8,722 9,724 8,663 8,775 9,045 10,141 9,412 8,956
Jan'23 8,481 8,277 9,181 9,920 9,005 8,565 9,312 9,595 9,467 9,763
Feb'23 8,733 8,540 9,080 9,482 8,485 8,779 9,311 10,003 9,255 9,360
Mar'23 8,943 8,524 8,759 10,347 8,785 8,834 9,204 10,235 9,389 9,285
Apr'23 8,267 8,170 9,078 10,309 8,752 8,605 8,902 9,946 9,597 9,262
May'23 8,544 8,414 9,108 9,107 8,631 8,338 9,250 10,481 9,360 9,113
MoM difference (%) 3 3 0 -12 -1 -3 4 5 -2 -2
May to Mar difference (%) -4 -1 4 -12 -2 -6 0 2 0 -2
MoM difference with the Cheapest (%) 2 1 9 9 4 0 11 26 12 9
Source: MOFSL

DMart Ready- Loss widens due to expansion

 The company has expanded its e-commerce footprint to 22 cities in FY23 from 9
cities in FY22 and 1 city (Mumbai in FY20) before the pandemic.
 Top 5 cities (Mumbai, Pune, Bangalore, Hyderabad and Ahmedabad) generate
more than 90% of total revenues.
 It added 4 smaller cities in FY22 (Surat, Vadodara, Bhopal and Indore) and
around 13 cities in FY23.
 As of FY21, when the company operated in 5 cities mentioned above, the loss
remained restricted to 6-7% of total PAT of DMART.
 With the addition of new cities, it seems the loss widened to 10% in FY22 since
the new cities were on the pilot version.
 Since most of the new cities are on pilot/just experiments with capital
allocations commensurate with outcomes, the loss reported by DMart Ready
would be a key monitorable.

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Exhibit 19: DMart Ready — City network Exhibit 20: DMart Ready proportion in revenue/PAT
22 DMart Ready (INR m) FY18 FY19 FY20 FY21 FY22
Cities
Revenue 441 1,436 3,540 7,913 16,672
YoY% 225 147 124 111
Consol revenue (INR b) 150 200 249 241 310
9 YoY% 33 24 -3 28
5 DMart ready revenue share (%) 0 1 1 3 5
1 1 1 DMart Ready Loss -481 -508 -797 -806 -1,421
Consol PAT (INR b) 8.1 9.0 13.0 11.0 14.9
FY18 FY19 FY20 FY21 FY22 FY23
DMart ready loss share (%) -6 -6 -6 -7 -10
Source: MOFSL, Company Source: MOFSL, Company

Treading cautiously in e-commerce through DMart Ready stores

While other players are aggressively moving into the e-grocery space, DMart is
treading cautiously through its DMart Ready stores. Online players are largely
present in metro/Tier I cities, where DMart already has physical stores. It is
leveraging this presence with delivery/pick-up options at an attractive pricing (refer
Exhibit 17) through DMart Ready. Our price monitor indicates that it is able to
compete with bigger players on pricing through operational efficiencies.

DMart Ready: Store economics

We calculated the store economics of DMart Ready stores based on inputs from our
channel checks. Our workings indicate that a typical store generates an annual
revenue of INR9m at 17 daily orders worth INR1,500. At 13% gross margin, this
should deliver a gross profit of INR1.2m. Apart from that, a store has operational
expenses of INR1.4m, assuming three employees per store at a monthly expense of
INR23k, monthly rent of INR150/sqft for a 250sqft area store, and
utilities/marketing expenses of INR4k/INR5k per month. The company posts an
operational loss of INR0.2m at the store level, i.e. -2% margin. To be profitable, a
store needs to service about 20 daily orders worth INR1,500, or its average order
value should increase to INR1,750 at the current level of 17 daily orders to achieve
revenue of ~INR11m.

Delivery cost a bone of contention

The company delivers orders in two ways: 1) pick-up points, and 2) home delivery. It
utilizes DMart Ready stores as pick-up points, wherein customers can place an order
and receive it at a scheduled time. The company does not charge for the pick-up
service. However for home delivery, the company charges a flat delivery charge of
INR49. It is utilizing fulfillment centers to service its online orders – orders are
shipped directly from fulfillment centers to DMart Ready stores or the delivery
location (DMart Ready stores are not utilized for home delivery). This helps in saving
overheads and logistic costs by utilizing these stores. As a result, its e-commerce
operations enjoy superior supply chain efficiencies.

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 Avenue Supermarts

Exhibit 21: DMart Ready store economics

Particulars Annual Amount (INR)
Daily order (n) 17
Order size 1,500
Annual Revenue 91,80,000
COGS 79,86,600
Gross margin 13%
Gross profit 11,93,400
Employee cost 8,28,000
Rent 4,50,000
Others 1,08,000
Operational expense 13,86,000
EBITDA (1,92,600)
Margin (%) -2.1%
Source: Company, MOFSL

Exhibit 22: E-commerce players’ unit economics

Particulars % shared How change impacted profitability
 Higher sales of private labels led to higher
Commission/margin 12%
margin during COVID
Cashback (-) 6%  Drop in discount during COVID
 Higher AOV during COVID, thus lower cost of
Supply chain cost (-) 9%
delivery
Payment gateway cost (-) 1%  No major change
Marketing expense (-) 8%  Significant reduction during COVID
Contribution margins (-) 12%
Source: RedSeer report

Exhibit 23: Comparison of business models of F&G online players

Particulars Inventory led Hyper local Multi-channel Dark store

Inventory heavy model as it Inventory light model as it Hybrid model combine Inventory heavy model as it
Inventory storage involves outright purchase of provides only infra & logistic features of inventory and involves outright purchase of
inventory support. hyper local model inventory

Capital requirement Capital intensive Capital light Moderate capital Capital intensive

SKU's High Low Moderate Low

Lead Time High Low Moderate Low

Margin potential High Low Moderate Low

Quality checks High Low Moderate High

Source: MOFSL, Company

DCF-based valuation indicates DMART is trading at fair value

Given the strong cash flows in DMART, we project cash flows for 25 years (FY26-50)
to plot the supernormal growth period followed by normalized periods.
 During the supernormal growth period of FY26-30E, we have modeled a 25%
revenue CAGR assuming 8% SSSG, with same EBITDA margin of FY25, along with
3.2% capex to sales and 1.4% working capital requirements of sales.
 After that, for FY31-41E, we have slowed down revenue growth by 100bp per
year and taken a 10bp improvement in EBITDA margin per year. We have
assumed 2.9% capex to sales and 1.4% working capital requirements of sales;

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 Avenue Supermarts

 And then growth staggered to a 10% CAGR over FY42-50E assuming 5% SSSG
and keeping the margins at 10%.
 Assuming a terminal growth rate of 4% and WACC of 11.5%, we arrive at a TP of
INR4,200, offering 21% upside.

Exhibit 24: DCF Valuation

DCF Valuation INR b
Enterprise Value 2,749
Net Debt -16
Equity Value 2,765
No. of Shares (m) 648
Target Price (INR) 4,200
CMP (INR) 3,547
Upside (%) 18%
Source: MOFSL, Company

Exhibit 25: Expect 27% revenue CAGR over FY23-25 Exhibit 26: Expect 28% GP CAGR over FY23-25
Revenue (INR b) YoY growth (%) Gross Profit (INR b) Gross margin (%)

15.9%
39% 38%

15.4%
33% 33%
15.3%

15.2%
28% 25% 29%

15.1%
26%

15.1%
15.0%
24%
14.9%

14.9%

14.8%
-3%

86 119 150 200 249 241 310 428 536 689 12.8 18.2 24.0 30.0 37.7 35.9 45.8 64.6 81.4 106.2
FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E
Source: MOFSL, Company Source: MOFSL, Company

Exhibit 27: Expect 31% EBITDA CAGR over FY23-25 Exhibit 28: Expect 29% PAT CAGR over FY23-25
EBITDA (INR b) EBITDA margin (%) PAT (INR b) PAT margin (%)

5.4% 5.2% 5.6% 5.5% 5.8%

9.0% 9.1%
8.2% 8.2%
8.6% 8.5% 8.8% 4.5% 4.6% 4.8%
8.1%
7.7%
7.2% 3.7% 4.0%

6.6 9.8 13.5 16.3 21.3 17.4 25.0 36.4 46.9 62.6 3.2 4.8 8.1 9.0 13.0 11.0 14.9 23.8 29.3 39.7
FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E
FY22
FY16

FY17

FY18

FY19

FY20

FY21

FY23

FY24E

FY25E

Source: MOFSL, Company Source: MOFSL, Company

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 Avenue Supermarts

Exhibit 29: Expect FATR to improve Exhibit 30: Expect improvement in RoE / ROCE
Capex (INR b) FATR RoE (%) RoCE (%) RoIC (%)
32.0
4.3 4.1
3.9 4.0
3.6 3.5
3.2 24.0
2.9 3.1
2.8
16.0

8.0
6.3 6.4 9.1 14.0 17.1 20.3 23.9 22.1 24.6 28.2
0.0
FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24E

FY25E

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23E

FY24E

FY25E
Source: MOFSL, Company Source: MOFSL, Company

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 Avenue Supermarts

Financials and valuations

Consolidated - Income Statement (INR m)
Y/E March FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E
Total Income from Operations 1,50,332 2,00,045 2,48,702 2,41,431 3,09,763 4,28,396 5,35,526 6,89,367
Change (%) 26.4 33.1 24.3 -2.9 28.3 38.3 25.0 28.7
Raw Materials 1,26,356 1,70,008 2,11,029 2,05,547 2,63,974 3,63,840 4,54,080 5,83,139
Gross Profit 23,976 30,037 37,673 35,884 45,789 64,556 81,445 1,06,228
Margin (%) 15.9 15.0 15.1 14.9 14.8 15.1 15.2 15.4
Employees Cost 2,826 3,554 4,561 5,366 6,162 7,470 9,104 11,375
Other Expenses 7,622 10,150 11,829 13,088 14,642 20,716 25,437 32,262
Total Expenditure 1,36,804 1,83,712 2,27,419 2,24,000 2,84,778 3,92,025 4,88,622 6,26,775
% of Sales 91.0 91.8 91.4 92.8 91.9 91.5 91.2 90.9
EBITDA 13,528 16,333 21,283 17,431 24,985 36,370 46,904 62,592
Margin (%) 9.0 8.2 8.6 7.2 8.1 8.5 8.8 9.1
Depreciation 1,590 2,125 3,744 4,142 4,981 6,389 7,647 9,049
EBIT 11,938 14,208 17,539 13,289 20,004 29,982 39,257 53,543
Int. and Finance Charges 595 472 691 417 538 674 742 742
Other Income 693 484 600 1,962 1,175 1,293 1,665 1,591
PBT after EO Exp. 12,036 14,219 17,448 14,835 20,641 30,601 40,181 54,392
Total Tax 4,158 5,195 4,438 3,840 5,717 6,818 10,849 14,686
Tax Rate (%) 34.5 36.5 25.4 25.9 27.7 22.3 27.0 27.0
Minority Interest -185 1 1 0 0 0 0 0
Reported PAT 8,063 9,024 13,009 10,994 14,924 23,783 29,332 39,706
Adjusted PAT 8,063 9,024 13,009 10,994 14,924 23,783 29,332 39,706
Change (%) 68.4 11.9 44.2 -15.5 35.7 59.4 23.3 35.4
Margin (%) 5.4 4.5 5.2 4.6 4.8 5.6 5.5 5.8

Consolidated - Balance Sheet (INR m)

Y/E March FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E
Equity Share Capital 6,241 6,241 6,478 6,478 6,478 6,483 6,483 6,483
Total Reserves 40,450 49,634 1,04,320 1,15,359 1,30,299 1,54,304 1,83,636 2,23,343
Net Worth 46,691 55,875 1,10,797 1,21,837 1,36,776 1,60,787 1,90,119 2,29,825
Total Loans 4,393 4,298 37 0 0 0 0 0
Lease Liabilities 2,955 3,927 6,469 6,430 6,767 7,292
Deferred Tax Liabilities 452 633 474 512 640 770 770 770
Capital Employed 51,541 60,811 1,14,268 1,26,281 1,43,890 1,67,987 1,97,656 2,37,887
Gross Block 37,223 49,352 68,484 83,178 1,10,486 1,37,680 1,65,216 1,96,633
Less: Accum. Deprn. 4,006 6,131 9,786 13,873 18,669 25,058 32,704 41,753
Net Fixed Assets 33,217 43,221 58,698 69,305 91,817 1,12,622 1,32,512 1,54,880
Right to use assets 7,173 9,602 13,887 15,049 15,930 16,860
Capital WIP 1,471 3,768 3,644 10,196 11,293 8,292 8,292 8,292
Total Investments 682 165 31,374 30 59 2,022 1,618 1,294
Curr. Assets, Loans&Adv. 20,330 22,118 26,264 56,237 50,758 57,327 69,089 91,457
Inventory 11,634 16,087 19,474 22,483 27,427 32,435 42,298 54,320
Account Receivables 335 644 196 436 669 622 796 1,024
Cash and Bank Balance 5,602 2,191 1,079 14,456 2,986 14,083 15,809 25,926
Loans and Advances 2,758 3,197 5,516 18,863 19,677 10,187 10,187 10,187
Curr. Liability & Prov. 4,942 9,246 6,497 10,280 10,838 13,076 14,655 18,836
Account Payables 3,173 4,633 4,335 5,781 5,892 7,538 9,568 12,287
Other Current Liabilities 1,642 4,474 1,996 4,236 4,533 4,965 4,552 5,860
Provisions 127 139 167 262 413 573 536 689
Net Current Assets 15,387 12,872 19,767 45,958 39,920 44,251 54,434 72,621
Deferred Tax assets 1 2 3 10 17 18 18 18
Appl. of Funds 51,541 60,811 1,14,268 1,26,281 1,43,890 1,67,987 1,97,656 2,37,887

8 June 2023 13
 Avenue Supermarts

Financials and valuations

Ratios
Y/E March FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E
Basic (INR)
EPS (diluted from FY17) 12.9 14.5 20.1 17.0 23.0 36.7 45.3 61.3
Cash EPS (diluted from FY17) 15.5 17.9 26.8 24.3 31.9 48.3 59.3 78.1
BV/Share (diluted from FY17) 74.8 89.5 177.5 195.2 219.2 257.6 304.6 368.3
DPS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Payout (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Valuation (x)
P/E 274.6 245.3 176.6 209.0 154.0 96.6 78.3 57.9
Cash P/E 229.3 198.6 132.1 146.2 111.2 73.4 59.9 45.4
P/BV 47.4 39.6 20.0 18.2 16.2 13.8 11.6 9.6
EV/Sales 14.7 11.1 9.2 9.5 7.4 5.3 4.3 3.3
EV/EBITDA 163.5 135.6 106.6 131.2 92.1 63.0 48.8 36.4
Dividend Yield (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
FCF per share -2.9 -9.5 -6.6 -10.1 -15.7 6.5 4.6 18.0
Return Ratios (%)
RoE 18.9 17.6 15.6 9.5 11.5 16.0 16.7 18.9
RoCE 15.8 16.8 15.5 9.4 11.4 15.7 16.4 18.5
RoIC 20.4 18.3 19.7 11.0 12.5 17.1 18.2 20.9
Working Capital Ratios
Fixed Asset Turnover (x) 4.0 4.1 3.6 2.9 2.8 3.1 3.2 3.5
Asset Turnover (x) 2.9 3.3 2.2 1.9 2.2 2.6 2.7 2.9
Inventory (Days) 34 35 34 40 38 33 34 34
Debtor (Days) 1 1 0 1 1 1 1 1
Creditor (Days) 9 10 7 10 8 8 8 8
Leverage Ratio (x)
Current Ratio 4.1 2.4 4.0 5.5 4.7 4.4 4.7 4.9
Interest Cover Ratio 20.0 30.1 25.4 31.9 37.2 44.5 52.9 72.2
Net Debt/Equity 0.0 0.0 -0.3 -0.1 0.0 -0.1 -0.1 -0.1
31 26
Consolidated - Cash Flow Statement (INR m)
Y/E March FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E
OP/(Loss) before Tax 12,036 14,219 17,448 14,835 20,641 30,601 40,181 54,392
Depreciation 1,590 2,125 3,744 4,142 4,981 6,389 7,647 9,049
Interest & Finance Charges 595 472 691 417 538 674 742 742
Direct Taxes Paid -4,027 -5,018 -4,924 -2,616 -5,603 -7,089 -10,849 -14,686
(Inc)/Dec in WC -2,427 -3,507 -3,762 -1,271 -5,825 -3,199 -8,458 -8,070
CF from Operations 7,767 8,292 13,197 15,506 14,733 27,376 29,262 41,427
Others -467 -224 -395 -1,754 -1,009 -1,073 -1,665 -1,591
CF from Operating incl EO 7,300 8,068 12,801 13,751 13,724 26,303 27,597 39,836
(Inc)/Dec in FA -9,087 -13,970 -17,060 -20,275 -23,895 -22,065 -24,628 -28,185
Free Cash Flow -1,787 -5,902 -4,259 -6,524 -10,172 4,238 2,969 11,651
(Pur)/Sale of Investments -247 0 0 7,830 10,500 -1,500 404 324
Others 13,970 4,386 -29,505 1,345 500 434 1,665 1,591
CF from Investments 4,635 -9,584 -46,566 -11,100 -12,895 -23,131 -22,558 -26,271
Issue of Shares 0 0 41,869 0 0 155 0 0
Inc/(Dec) in Debt -10,791 2,600 -6,615 -1,359 0 0 0 0
Interest Paid -800 -510 -682 -436 -538 -674 -742 -742
Dividend Paid 0 0 0 0 0 0 0 0
Others 0 0 -998 0 -1,255 -1,533 -2,572 -2,707
CF from Fin. Activity -11,591 2,090 33,574 -1,795 -1,792 -2,051 -3,313 -3,448
Inc/Dec of Cash 345 574 -190 856 -964 1,120 1,725 10,117
Opening Balance (without bank bal.) 329 674 1,249 1,059 1,915 951 2,072 3,797
Closing Balance 674 1,249 1,059 1,915 951 2,072 3,797 13,914
Other bank balance 4,928 942 20 12,541 2,035 12,012 12,012 12,012
Closing Balance (including bank bal) 5,602 2,191 1,079 14,456 2,986 14,083 15,809 25,926

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

8 June 2023 14
 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 be
within following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Depository participant services & distribution of various financial products. MOFSL is a listed public
company, the details in respect of which are available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOFSL) is registered with the Securities &
Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi
Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with
Central Depository Services Limited (CDSL) National Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India
(AMFI) for distribution of financial products and Insurance Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products. Details of associate
entities of Motilal Oswal Financial Services Limited are available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) 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) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any 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.
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at www.nseindia.com, www.bseindia.com. Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg. No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL, including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co. Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore. As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
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.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
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
********************************************************************************************************************************

8 June 2023 15
 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 at the end of the month immediately preceding the date of publication of the Research Report or
date of the public appearance.
- received compensation/other benefits from the subject company in the past 12 months
- any 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) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
- Served subject company as its clients during twelve months preceding the date of distribution of the research report.

The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
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
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information. The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 - 71934200 / 71934263;
www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 71881000.
Details of Compliance Officer: Neeraj Agarwal, Email Id: na@motilaloswal.com, Contact No.:022-40548085.
Grievance Redressal Cell:
Contact Person Contact No. Email ID
Ms. Hemangi Date 022 40548000 / 022 67490600 query@motilaloswal.com
Ms. Kumud Upadhyay 022 40548082 servicehead@motilaloswal.com
Mr. Ajay Menon 022 40548083 am@motilaloswal.com
Registration details of group entities.: Motilal Oswal Financial Services Ltd. (MOFSL): INZ000158836 (BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research
Analyst: INH000000412 . AMFI: ARN .: 146822. IRDA Corporate Agent – CA0579. Motilal Oswal Financial Services Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit,
Insurance, Bond, NCDs and IPO products.
Customer having any query/feedback/ clarification may write to query@motilaloswal.com. In case of grievances for any of the services rendered by Motilal Oswal Financial Services
Limited (MOFSL) write to grievances@motilaloswal.com, for DP to dpgrievances@motilaloswal.com.

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