Indian Retail Sector- Analysis

Industry Overview : Globally, India being the 2nd largest populated country after China – it holds the
key consumer markets with consumption expenditure set to increase to USD 2 trillion by 2020 and will
surpass the consumption expenditure of several other developed economies. Key factors that will
continue to drive this momentum are (i) favorable demographics (ii) rapidly rising education levels (iii)
steady growth of urbanization (iv) increasing penetration of mobile technology and internet
infrastructure (v) increasing aspirations and affordability and (vi) Government’s focus on reforms, skill
development, job creation, infrastructure, manufacturing and investments etc.

Private consumption continues to be the largest driver of the economy in the country. In India, nearly
~50% of private consumption is attributed to the retail industry. Considering various research reports on
the industry, it is believed that retail industry in India is on a strong growth trajectory. Per-capita GDP in
India is around $2,000 -basis which the consumption on Food, Fashion & Home is expected to grow 2-3
times in the next decade. This trend matches to other emerging markets upon leveling per capita GDP
near to $2,000.

India’s favorable demographics, rising middle class with increasing share of discretionary spends and a
rise of shopping area and e-commerce are considered as key potential drivers of this growth.
The only area of attention, if not concern, is the challenge posed by e-retail in India. It is fuelled by major
investments from global powerhouses such as Amazon & Indian startups such as Flipkart (now a
Walmart company) in their Indian ecommerce operations.

These investment and cash heavy organizations tend to offer discounts - which is capturing the urban
population through their ease of access and lower prices & exclusive launches - partially reducing the
urban customer base which used to shop in offline retail until now. Additionally, to fulfill their growth
plans, now they are also focusing on tier II & III cities as well by expanding their last mile connectivity &
product mix - which is easier to keep up with in online retail- as little to no investment is required to
enable this, compared to offline retail. While offline retailers have invested in technology to increase
their customer acquisitions, retention of existing user base and manage footfalls through new channels,
the key challenge still is “value for money” and “ease of access” - which is luring urban and remote
population away from offline retail while moving them towards these online retailers.

I. Identified Companies from the Retail Sector

As offline retail is still most prominent in India, despite strides in online commerce, we have picked 2
companies for comparison. Future Retail Ltd owned lead by Mr. Kishore Biyani & Avenue Retail Ltd. -
lead by Mr RK Damani.

1. Future Retail Limited (Formerly known as Bharti Retail Limited) - Brand “Big Bazar”
2. Avenue Retail Ltd - Brand “ D-mart ”
While Future retail –Big Bazar ; a market leader- has a wide presence across PAN India with 1035 stores
in 321 cities, spread across 26 states and UTs ; Dmart - which has limited presence, mostly in South-
West & South of India, with 155 stores in 11 states and 1 UTs.
Future Retail Limited -“Big Bazaar” :- is part of Future Group, which also owns the Central Hypermarket,
Brand Factory, Pantaloons, eZONE, HomeTown, KB's Fair Price to name a few and is owned through a
wholly owned subsidiary of Pantaloon Retail India Ltd. Big Bazaar was started by Kishore Biyani, the
Group CEO and Managing Director of Pantaloon Retail. Though Big Bazaar was launched purely as a
fashion format including apparel, cosmetics, accessory and general merchandise, over the years Big
Bazaar has included a wide range of products and service offerings under their retail chain. The current
formats include Big Bazaar, Food Bazaar, Electronic Bazaar and Furniture Bazaar. The inspiration behind
this entire retail format was from Saravana Stores, a local store in T. Nagar, Chennai. The stores are
customized to provide the feel of mandis and melas . while offering the modern retail features like
Quality, Choice and Convenience. As the modern Indian family's favorite retail store, Big Bazaar is
popularly known as the "Indian Walmart".“Big Bazaar”- The name familiar to millions of Indians - started
as a humble startup, around 32 years ago, under the name of Manzwear Private Ltd. Pantaloons was the
first brand established in the market for the entity - which later thriving on the success in the apparels
industry, launched it's first IPO way back in 1992. Over the next five years, it transformed itself into
modern retail outlet based business from being an apparel marketing brand. Big Bazaar was launched in
September, 2001 with the opening of its first four stores in Calcutta, Indore, Bangalore and Hyderabad
in 22 days.

Based on the success of the model, it entered into FMCG category to cater to growing demand from
Indian middle class households, which a year later, also lead to the birth of Food Bazaar. Growing
strength by strength, over the years, Future Retail Limited got engaged in the business of retailing a
range of household and consumer products through departmental store facilities under various formats
(LFR/Small Store/Online Commerce).

The company is primarily engaged in the business of multi-brand retail trade. Its retail formats primarily
consists of value business and home business. In its value business, the company formats include Big
Bazaar, a hypermarket format; Food Bazaar, a supermarket; FBB as a fashion destination; Foodhall as
their supermarket, and Easyday convenience stores. In its home business, the company operates Home
Town, a one-shop destination for home improvement, and eZone, a consumer durable and electronics
chain.

Today, it is one of the leading retail brands in India, covering 300+ cities through their 1000+ stores -
covering 14.5 Million Sq Ft space - one of the largest in India. Their 67% of revenue is generated from
non-food categories, serving more than 340Million customers annually.

They have got an ecosystem built - ranging from retailing in FMCG, electronics, home furnishings,
consumer durables along with their new offerings such as - future pay wallet, easyday subscriptions,
Hypercity. Their most events are well marketed resulting in increased sales such as - “Sabse Sasta 5 din”,
twitter campaigns, marketing from film stars, FBB etc has resulted in great brand proposition across all
price segments - serving lower to upper middle class of Indian population.

Avenue Retail Ltd - Brand (D-Mart).:- owns and operates hypermarkets and supermarkets by the store
name D-Mart. Avenue Supermarts Limited is an emerging national supermarket chain, with a strong
focus on value-retailing. D-Mart seeks to provide a one-stop shopping experience for the entire family,
meeting all their daily household needs. A wide selection of home utility products is offered, including
foods, toiletries, beauty products, garments, kitchenware, bed and bath linen, home appliances and
much more.
Since D-Mart first opened its doors in the Mumbai region in 2002, it has grown into a trusted and theyll-
established shopping destination in Maharashtra, Gujarat, Andhra Pradesh and Karnataka. D-Mart is
now looking forward to growing its stores across India. Dmart was founded by Mr RK Damani in the year
2002, starting from a single store in Maharashtra. The idea was to be the lowest priced retailer in their
area of operations, they have shown steady growth. As on date they have 155 stores with Retail
Business Area of 4.94 million sq.ft., located in Maharashtra (62 stores), Gujarat (30), Karnataka (12),
Telangana (19), Andhra Pradesh (10), Madhya Pradesh (6), Chhattisgarh (3), NCR (1), Daman (1), Tamil
Nadu (3) Rajasthan (5) and Punjab (3) spread across 11 States and 1 UT of India.

The product mix Dmart offers, is primarily consisting of varied, everyday-use items to its customers with
their assortment of different product mix.

The products offered in the stores can be categorised into main 3 categories only:
1. Food such as Dairy, staples, groceries, snacks, frozen products, processed foods, beverages &
confectionery and fruits & vegetables. These accounted for 53% of their overall revenue for the
FY 2017-18.
2. Non Foods - such as Home care products, personal care products, toiletries and other over-the-
counter products - these account for their 19.85% of the revenue.
3. General Merchandise and Apparel - These categories contribute a significant 26.83% of total
revenue share. IT comprises of Bed & bath, toys & games, crockery, plastic goods, garments,
footwear, utensils and home appliances primarily.

Complete Annual Reports of the two companies for the financial year 2017-18
We are attaching the complete annual Reports of the two companies in a separate email. Also the below
links are provided to access the same online as well.

 Future Retail Annual Report

 Dmart Annual Report

Future Retail Highlights

Avenue Super Mart Highlights
MANAGEMENT DISCUSSION AND ANALYSIS – FUTURE RETAIL

Business Overview: - They call this year 2017-18 as a year of “Delivering Promises”.
 During the year, the productivity of their large format stores (Big Bazaar) increased by 11.5%
over the last financial year.
 They added 50 new large stores during the year and were able to achieve a 13.4% same store
sales growth in this format.
Their past investments in back-end technology have been at the center of this growth and they believe
that the technology-led processes create an unparalleled layer of MOAT across the network & formats
of FRL. On Small Stores, they are focused on increasing the depth in their clusters and membership base.
To this extent, they had set a target of achieving close to 800 stores by the year-end and they were able
to close the year with around 750+ small stores (including acquisitions that were closed soon after the
end of the financial year). They added 4 lakh members in this year to a modest opening base of 1 lakh
members, setting this firmly on path to become one of India’s deepest customer engagement programs.
This year saw the consolidation of two iconic retail chains with their existing network of stores. Post
consolidation of Heritage stores with their small stores in the first quarter, they are now witnessing a
strong growth opportunity in the southern market. With Heritage retail business, the Company added
136 stores in 3 cities of Southern India.
The small stores’ business in Northern India, has already started showing better efficiency. The
acquisition of Hypercity Retail has added 19 large format stores across marquee locations with strong
market share in their cities’ of presence. Fiscal 2019 is expected to deliver strong value enhancements
from these acquisitions from synergistic mutual strengths, rationalization of back-end costs and
economies of scale. Increasing the velocity of sales and productivity of stores is a key focus for the
Company while continuously deepening the presence.

The Company now operates in broadly two formats, large format retail through the Big Bazaar and small
format neighborhood retail business, across Food, Fashion and Home. Management now has sharper
focus on the business post the demerger of Home Retail Business and a substantial closure of Electronics
Retailing format. This enhanced focus on core ensures better prospects of higher ROCE along with
greater free operating cash flows. With higher volume achievements for its various supply partners, the
Company is able to negotiate better margins at higher scale with improved quality & availability. Pan-
India reach continues to yield strategic edge to the business and all incremental space additions make
the back-end operations more cost effective. At the same time, greater focus on control has been
contributing to an overall cost reduction. FRL employs 38,626 employees located at Head Office, Zonal
Offices, Retail Stores, Design houses and Data-Centers across the Country.

Review of Financial Performance of the Company for the year under review
The financial results for the twelve months ended March 31, 2018 are not comparable with
corresponding period of previous year, due to demerger of Home Retail Business undertaking to Praxis
Home Retail Limited and vesting of demerged Retail undertaking of Heritage Foods Retail Limited and
Retail Business undertaking of Hypercity Retail (India) Limited with the Company.
 Sales: The Company’s Sales and Other Operating Income has increased from ` 17,075.09 Crore in
previous financial year to ` 18,477.97 Crore with Y-o-Y growth of 8.22% for the financial year ended
March 31, 2018. The Company has also recorded Same Store Sales growth of 9.9% for financial year
ended March 31, 2018.
 Profit Before tax (excluding one-time non-cash exceptional expense): Profit Before Tax of the
Company for financial year ended March 31, 2018 stood at ` 615.18Crore as compared to ` 368.28
Crore during the previous financial year.
 Interest: Interest & Financial charges out flow has decreased from ` 204.23 Crore incurred in
previous financial year to ` 175.38 Crore for financial year ended March 31, 2018. The decrease in
interest and financial charges is on account of decrease in average borrowings during the year and
lotheyr interest rates. The interest & financial charges cover for financial year ended March 31, 2018
under review is 4.81 times as compared to 2.96 times in the previous financial year.
 Net Profit: Net Profit of the Company for financial year ended March 31, 2018 stood at ` 11.31 Crore
as compared to ` 368.28 Crore in the previous financial year. The decrease in the net profit is on
account of the one-time non-cash expense of ` 603.87 Crore due to loss on sale of investments.
 Dividend: The Board of Directors of the Company has not recommended any dividend for the
financial year ended March 31, 2018.
 Capital employed: The capital employed in the business is ` 4,382.68Crore as at March 31, 2018.
Return on capital employed (average capital employed) during 2017-18 is 19.33% as compared to
16.85% during 2016-17.
 Surplus management: The Company generated a cash profit of ` 668.61Crore for financial year
ended March 31, 2018 as compared to ` 400.86Crore in the previous financial year, registering the
growth of 66.79%. The amount, is ploughed back into the business to fund the growth.
 Equity share capital: The equity share capital of the Company has increased from ` 94.36 Crore to `
100.40Crore due to ` 3.57 Crore worth of shares issued to shareholders of HFRL as per Scheme of
Arrangement, ` 1.86 Crore worth of shares issued to shareholders of Hypercity as per Scheme of
Arrangement, ` 0.57 Crore worth of shares issued to Cedar Support Services Limited on conversion
of 1,542 Optionally Convertible Debentures and balance to employees exercising their stock options
during the financial year under review.
 Net Debt-Equity: Net Debt-Equity ratio of the Company was 0.36 as at March 31, 2018.
 Earnings Per share (EPS): The Company’s EPS (before exceptional items) has increased from ` 7.81 in
previous financial year to ` 12.45 per share for the financial year ended March 31, 2018.
 Cash Earnings Per Share (CEPS): The Company’s CEPS (before exceptional items) has increased to `
13.32 in current financial year in comparison to ` 8.50 in the previous financial year.

Management Discussion and Analysis – Avenue Super Mart.

Avenue Supermarts Limited is an emerging national supermarket chain, with a strong focus on value-
retailing. The Company delivered stable performance across stakeholder metrics and focused on
keeping the financial fundamentals intact. The first 8 years, were focused on setting up the foundation,
rather than growing rapidly. The time spent in initial years, helped them in validating the business
model from a perspective of both profitability and scalability. While the growth has been centered in
few states only, and this has been a strategic decision as they follow a cluster-based expansion
approach. The idea is to focus on deepening the penetration in the areas with existing presence, before
expanding to newer regions.

They shall continue to focus on our strategy of offering value retailing to our customers using the EDLC /
EDLP (Everyday Low Cost/Everyday Low Price) principle. Their stores are supported by IT and
operational management systems specific to our business needs. These systems streamline many of our
functions such as procurement, sales, supply chain and inventory control processes and produces
updated information to support our business, on a daily basis. As a result, they are able to procure their
merchandise from distribution centers or directly from suppliers and manage their inventory levels
efficiently to better respond to customers’ changing preferences and needs.

Key Performance Indicators

 Their total number of bill cuts, was 13.44 crores during the fiscal 2018 as compared to 10.85
crores during fiscal 2017.
#
 Their annualised revenue from sales per retail business area sq. ft. ( ) was ` 32,719 for fiscal
#
2018 and ` 31,120 for fiscal 2017. Annualised revenue from sales calculated on the basis of 365
days in a year (on standalone basis) divided by Retail Business Area at the end of fiscal.

Financial Performance

(` in lakhs)
Standalone Consolidated
Particulars FY 2018 FY 2017 Increase/ FY 2018 FY 2017 Increase/
(Decrease)% (Decrease)%
Net 1,500,889.30 1,188,111.90 26.33% 1,503,319.90 1,189,769.56 26.35%
Sales/Income
from operations
Other Income 7,264.77 3,128.86 132.19% 6,932.08 2,855.93 142.73%
Finance Cost 5,941.99 12,180.39 -51.22% 5,954.74 12,197.86 -51.18%
Profit Before tax 119,588.76 74,711.27 60.07% 122,206.91 74,708.42 63.58%
Profit After Tax 78,466.03 48,263.85 62.58% 80,627.58 47,879.81 68.40%
EPS - Basic (in `) 12.57 8.56 12.92 8.49
EPS - Diluted (in `) 12.41 8.55 12.76 8.48
ANALYSIS OF ANNUAL REPORTS ( All values in INR Crores )
Key observations from Balance sheets of the two companies.

 Fixed Assets : Avenue Supermart has a tangible non-current asset of Rs.2515Cr compared to
Rs.488Cr( almost 5 times ) of Future Retail. Which means they are more predominantly investing
in land and properties, rather working on leased buildings. They have higher long term debt due
to this major Investment in fixed assets.
 Current Assets : Future Retail Ltd has comparatively higher amount against their current assets -
under inventory, which points out that business is investing more on stock - as they have large
network of 1000+ shops. Whereas Avenue Retail is keen on PPOE - skewed towards land (free &
leasehold).
 Intangible Assets: Intangible assets are only listed on a company's balance sheet if they are
acquired assets. Since Future retail has many acquisitions in the recent past, the goodwill paid
would appear here, where as Avenue Super mart hasn’t have many acquisitions comparatively.
Intangible assets are considered a crucial factor of retail companies ’business success. Globally,
there is a trend observed, supporting increasing share of intangible assets in trade value and
total assets for renowned retailers (Source). It basically suggests investments in innovation,
brand, knowledge and technology (Technology primarily refers to IT here) is the way to proceed
is as perceived by most of retailers worldwide. Thus they may suggest that adequate managing
of intangible investment can fulfill the desirable profits of retailing companies, which are
investing in technology. When we compare this aspect for Future & Avenue retail, Future group
seems to be having an edge on this. They are investing on technology to leverage their business.
Same is also evident from their Retail 1.0, 2.0 & 3.0 vision, where the use Social media to drive
footfalls, offering Apps to extend home delivery, combining O2O (Offline to Online businesses),
Wallets as a tool to drive customer loyalty & stickiness, using AI to make business decisions,
inventory management (super crucial in retail) and even to increase employee productivity. This
may be the differentiator between both the entities in long run - as Future Retail is investing
in IT to increase business, acquire customer & cost reduction - whereas Avenue is more
focused on cost reduction on their properties (energy efficiency primarily) - which may not
make a significant change in the bottom-line. Their acquisition of Avenue Ecommerce may not
be as impactful, as it hasn’t been able to drive much of sales for them historically and failed to
contribute decent sales to their business.

 Trade receivable on the higher side for Future retail about 1.5% of their turnover- especially
when they are into cash & carry business, this is not a good sign, where as Avenue super mart
has receivables to a negligible level of about 0.14%
 Lot of funds has been deployed as short term advances and long term advances under current
& non-current assets, in the case of Future retail, which is not a good sign as lot of cash is going
out. Whereas in the case of Avenue super mart they have zero in the respective areas.
 Trade payables: - In the case of future group, trade payables are quite high which indicates
higher suppliers credit, which is 18.5% of the total sales, where as in the case of Avenue super
mart its only 1.77%.
 Paid up Capital for Future is only 100 Crore where as Avenue has 624Crore. Avenue has infused
lot of capital into the business comparatively.
 Contingent liability is also quite high with Future retail, which again shall burden the cash flow.
Key observations from Profit and Loss Account the two companies.

 Even though Future retail is operating with a PAN India network with 1035 stores in hand, it
could generate only 18,477 Croes as revenure, ie 17.85Crore sales per store on an average,
where as Avenue super mart could generate 15088 Crore from just 155 stores, ie 96.82 Crores
from each stores on an average, which is a significant achievement, which need to be
benchmarked. That mean each D-mart store is capable of generating a business of 5.42times
higher than Big-Bazar store.
 Exceptional items, which is the reason for decrease in the net profit of Future retail; is on
account of the one-time non-cash expense of ` 603.87 Crore due to loss on sale of investments.
 All other Performance Ratios with respect to P&L would be discussed while comparing the ratios
separately in the last session.
 COMPARATIVE CASH FLOW STATEMENT
Avenue
Future Retail
SuperMarts
( Big Bazar)
( D Mart)

2017-18 2017-18

Net Profit/Loss Before Extraordinary Items And Tax 11.31 1,195.89

Net CashFlow From Operating Activities 600.59 722.98
Net Cash Used In Investing Activities -468.91 432.5
Net Cash Used From Financing Activities -130.47 -1,121.73
Adjustments on Amalgamation / Merger / Demerger / Others 13.93 0
Net Inc/Dec In Cash And Cash Equivalents 15.14 33.75
Cash And Cash Equivalents Begin of Year 128.45 30.26
Cash And Cash Equivalents End Of Year 143.59 64.01

OBSERVATIONS FROM CASH FLOW STATEMENTS

It is observed that despite having a low sales turnover Avenue Super Mart is having a better cash flow
management than Future retail.
Cash flow from operating (CFO) activities: Shows that Avenue super mart was able to generate more
cash from operations with a lesser turnover; they could achieve this by lower operational cost. In the
case of Future retail, despite being turned down with a low net profit of 11.31 crores, they are able to
generate a 600Cr cash from operations, which they have managed by using their supplier credit, so that
incoming cash could be shed in to the system. As we could see the sundry creditors outstanding is
3424Crores. The cash generated from trade payables alone is 681crores. A loss of 603cr is registered on
the sale of an investment which has brought positive cash flow, however change in inventories brought
a negative cash flow of 742crores, all resulting in a positive cash flow of about 600crores. Being a retailer
giant, they can easily manage it as they have a better negotiation power with their suppliers. The beauty
of retail business is that their all customers are on cash and carry basis hence incoming flow is quick.
Cash flow from investing (CFI) activities: Negative cash here indicates the company cash is used for
investments for futures operations, such as Land, Buildings, PPE or similar Capex etc. An increase in
capital expenditures means the company is investing in future operations; however, it also points to a
reduction in cash flow. Companies with high capital expenditures are generally in a state of growth.
Examples of negative cash flow from investing activities include the purchase of fixed assets, the
purchase of investment instruments (e.g., stocks), and lending money. Here in the case of Future retail,
the cash flow from investing activities is negative which shows an Investment in PPE of 375crores and
111crores of acquisition/purchase of any of its undertaking.

Examples of positive cash flow from investing include the sale of fixed assets, the sale of investment
instruments, and the collection of loans and insurance proceeds. Here in the case of Avenue super mart,
the cash flow from investing activities is positive, which shows they have converted some investments
to cash. Realization from FDs of IPO proceeds amounts for Rs.1358Cr, at the same time they have
invested in PPE of about Rs.989Crs, resulting in a net positive cash flow of Rs.432Cr from Investment
activities.
Cash flow from financing activities (CFF)
Transactions that Cause Negative Cash Flow from Financing Activities generally occurs due to Stock
repurchases, Dividends issue, Paying down debts etc.Here in both the cases it is seen from the detailed
cash flow statement that both the companies are having negative cash from financing activities because
of repayment of their huge debts. Especially Avenue super mart has long term loans due to purchase of
lands and fixed assets; repayment of these term loans/debts including non-convertible debentures are
resulting in such huge cash out from the company.

It is noticed that both the companies have not issued dividends this year to the share holders, hence no
cash has gone out in the form of dividend payout.

Profitability Ratios
1. Margin on sales
a. Gross Margin = Net Sales – COGS
b. Operating Profit Margin = Operating profit/Net Sales

Avenue
Future Retail
SuperMarts
( Big Bazar)
( D Mart)

Gross Margins 4737.29 25.64% 2360.01 15.72%

Operating Profit Margin 843.99 4.57% 1,409.96 9.39%
Comparatively Future Retail has a better Gross Margin than Avenue Super Mart. However when it
comes to the operating profit margin Avenue Super Mart has a better percentage, which implies that
Future retail has a huge operational overheads compared to Avenue Super Mart. Below is the
comparison made for other profitability ratios.
Avenue
Future Retail
SuperMarts
( Big Bazar)
( D Mart)
PBIT Margin (%) 4.27 8.36
PBT Margin (%) 0.06 7.96
Net Profit Margin (%) 0.06 5.22
Return on Equity (ROE)(%) 19.87 20.44
Return on Capital Employed (ROCE)(%) 0.32 25.43
Return on Assets (ROA)(%) 0.13 13.98
Total Debt/Equity 0.4 0.05
Asset Turnover Ratio (%) 225.49 267.42

All profitability ratios are extremely good for Avenue mart. That’s one of the reason why their shares are
valued higher than Future retail.
Avenue
Future Retail
Solvency Ratios SuperMarts
( Big Bazar)
( D Mart)
Accounts receivables turnover 68.41 714.71
Accounts payables turnover 4.21 48.22
Total Debt to Equity Ratio 0.41 0.29
Long term to Equity Ratio 0.13 5.52
Long term Debt to Fixed Asset 0.37 0.38
 Avenue
Future Retail
Efficiency Ratios SuperMarts
( Big Bazar)
( D Mart)
Receivables or Debtors Turnover 1.5% 0.1%
Inventory or Stock Turnover 3.26 13.78
Assets Turnover 2.25 2.59
Working capital turnover 9.09 7.37

As they could see all efficiency ratios are also good for Avenue Super mart. Avenue Marts cost
efficiencies may be difficult to replicate on larger chains or may not possible on a bigger scale.

Avenue
Future Retail
Liquidity Ratios SuperMarts
( Big Bazar)
( D Mart)
Current Ratio 1.43 2.88
Quick Ratio or Acid Test Ratio 0.49 1.18
Inventory Turnover Ratio 4.18 13.08
Net Working Capital 2,031.75 2,037.07

As they could see the working capital is almost same for both firms. Which means Avenue supermart
with not such a wide network has a high working capital requirement. However they have a better
liquidation ratios. Out of the 65 stores it runs, D-Mart owns 55 properties, saving substantially on rent,
which constitutes 6-10 per cent of retailers' sales. D-Mart, also refrains from opening stores inside malls
unlike other hypermarkets.

Future Retail Avenue SuperMarts

Valuation/Investors Ratios
( Big Bazar) ( D Mart)

EV/Net Operating Revenue 1.56 5.5

EV/EBITDA 34.05 58.52
MarketCap/Net Operating Revenue 1.5 5.52
Price/Net Operating Revenue 1.5 5.52
Earnings Yield 0 0.01

As they could see the Investors are getting a better return out from Avenue Super Mart, also the
valuation of the business is high since the non-current assets are high comparatively; That’s why its
stock value is 3 times higher than Future retail, even though Future retail is a leading market player with
larger network spread out across India. it’s IPO has been oversubscribed during last year. The company’s
shares were sold at Rs 299 apiece at the IPO and surged as much as 106% after listing at 604.4 on the
Bombay Stock Exchange on Tuesday, making it not only the first retailer to list in a decade, but also
perhaps the best IPO listing in recent Indian corporate history. So now it’s shares are in the peak
valuation.

Its current market cap stands at a cool Rs 39,400 crore – which is higher than the combined market
capitalisation of the market leaders both Future Retail and Aditya Birla Fashion.

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