Is DMart Share Fundamentally Strong?!?

Here is the 1 Min Short Version of this Article.

DMart is owned and operated by Avenue Supermarts Ltd. (ASL) – a company founded by Mr Radhakishan Damani in 2002.

The scenario of India’s Retail Sector

  • D-Mart market share is 10% in Organized retail sector.
  • In India’s retail sector, organized sector is only 15% and rest 85% is unorganized sector.
  • So there is a lot of room to for organized sector to improve and for D-Mart to capture more.

D-Mart’s Business Model

  • D-mart’s Business Model is very Simple i.e. Buy from Suppliers at a low price and give to consumers at a low price with low margins and revenue coming from high volumes.
  • Foods and FMCG products have very low margins which consists of 52.4% and 20.3% of D-Mart’s Revenue i.e. major part.
  • So these two categories have to sell in volumes.
  • They do sell in volumes because the quality of these segment of products provide by D-Mart is very good.
  • They Believe in philosophy that If the Quality of product is good customer will come again.
  • Here General Merchandise and Apparel products are those products which have high margins which help them to balance on profit margins.
  • Also D-Mart believes in Buying their Properties. 80% of their Properties are self owned.
  • Also their properties/stores are usually in Suburbs and not in posh neighborhood’s which helps them to buy those properties at a significantly lower prices.
  • Their Strategy is to open one store and distribution Centre in suburbs than populate it with more stores in radius of 3–5 kilometers.
  • This also helps to capture most of the customers of that area.

DMart’s Financials

  • D-Mart’s Sales, income, as well as profits, has been on a continuous rise for the past 5 years. Except the pandemic year which is passable!
  • As stated earlier D-Mart like to own their properties rather than lease that is the reason why their tangible assets are on rise year on year which is an excellent thing.
  • Also D-Mart is technically a debt-free company which makes them invest all their profits into their business without paying hefty interest.
  • Here Most of the Shares are owned by Promotors i.e. Mr Radhakishan Damani.
  • So owners of the Company has the most weightage in Decisions of the company which is a very good thing.
  • There is No pledging of shares by its owners which shows the trust they are having in their own company.
  • Also holdings of the FII’s , DII’s has only increased which again strengthens its fundamentals.
Source: TijoriFinance
  • In retail Sector one of the metrics to measure performance is how much sales per sq ft of their stores are giving here also D-Mart is at least more than 100% ahead of it’s competitors.
  • Net Profit % is also good for D-Mart.

D-Mart’s Technicals

  • D-mart is very good to buy at current levels which is the stock’s support levels.
  • If the Stock Breaks the current support levels of 3400-3420. The next support levels are at 3350–3370.
  • This stocks should be bought at every dip to have maximum gains for long term.

If you are invested in this stock for 5–7 years you can get 15–20% returns from this stock.

Again it will interesting to see how jio mart affects d-mart’s business. But according to me the retail space is very big and still has very good growth potentials for these two players to have profits and grow their businesses too.

This is for educational purposes only. Please consult your financial advisor before investing.

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2 thoughts on “Is DMart Share Fundamentally Strong?!?”

  1. Pingback: Is D-Mart good for the long term?!? (1 Min Read) - Finvestnance

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