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Saturday, September 23, 2023

DMart turns a ₹2 trillion company

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The Radhakishan Damani-owned company, registered as Avenue Supermarts Ltd, is slowly but steadily focusing on e-commerce. Damani is currently India’s second-richest man. DMart, which is one of India’s largest retailers, has seen its share price grow by over 35% during the course of the last one year, breaching its pre-COVID levels. The retailer registered a 16% rise in net profit of ₹447 crore for the December quarter even as its revenue climbed by 10% at ₹7,542 crore.

“The company targets lower-middle, middle, and aspiring upper-middle-income consumers for whom value for money plays an important role. Despite larger revenue dominated by food and grocery business (52% of revenue) coupled with thin margins (8.6% EBITDA margin), DMart provides lowest cost offerings to customers consistently, in turn gaining loyalty, a key factor for driving footfalls,” said a report by Axis Securities earlier last week.

Interestingly, through its FY20 QIP DMart had raised ₹40.78 billion, out of which close to ₹25.43 billion is yet to be used or deployed.

“DMart is strengthening its presence in the Western and Southern region. We are witnessing a complete transformation of retail – from unorganised to organised. I recently went to a DMart store and was amazed by the crowds. DMart stores have the quickest turnaround time to breakeven,” Kranthi Bathini, Equity Strategist at WealthMills Securities, was reported as saying in a call with Business Insider.

DMart is now building on the traction it has created with its e-commerce vertical DMart Ready. Neville Noronha, CEO and Managing Director of Avenue Supermarts, in a statement during its third quarter earnings call said the company had continued with the soft launch of DMart Ready in select areas of Ahmedabad, Bangalore, and Hyderabad.

“DMART has established an extensive cluster-based distribution network comprising 220 stores and 225 DMART Ready stores as of Q2FY21. The cluster-based approach has reduced the distribution and inventory cost for the company in turn bettering margins,” said the Axis Securities report.

Damani, who is also one of India’s top stock traders, launched Avenue Supermarts in the year 2000. Since then, he has steadily nurtured DMart transforming it into one of India’s big retail companies and is often touted  as a formidable competitor to Mukesh Ambani’s Reliance Retail.


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