Finlatics Market Experience Program

Research Insight III

Sector : Retail

Karan Wadhwani
Karanwadhwani1412@gmail.com
+918989834323
 OVERVIEW

DMart is a one-stop supermarket chain that aims to offer customers a wide

range of basic home and personal products under one roof. Each DMart store
stocks home utility products - including food, toiletries, beauty products,
garments, kitchenware, bed and bath linen, home appliances and more -
available at competitive prices that our customers appreciate. Company’s core
objective is to offer customers good products at great value.
DMart was started by Mr. Radhakishan Damani and his family to address the
growing needs of the Indian family. From the launch of its first store in Powai
in 2002, DMart today has a well-established presence in 214 locations across
Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh, Karnataka,
Telangana, Chhattisgarh, NCR, Tamil Nadu, Punjab and Rajasthan. Dmart
mission to be the lowest priced retailer in the regions it operate, Its business
continues to grow with new locations planned in more cities.
The supermarket chain of DMart stores is owned and operated by Avenue
Supermarts Ltd. (ASL). The company has its headquarters in Mumbai.
* The brands D Mart, D Mart Minimax, D Mart Premia, D Homes, Dutch
Harbour, etc are brands owned by ASL.
 Growing Numbers of DMart

DMart has consistently growing presence across India. In year 2002-03, DMart had
only 2 stores in India were in Maharashtra. But now, it has 176 stores across India.
DMart is the only company which has expanded its stores in large number in very
less years.
 Shareholding Pattern of Avenue Supermart
Ltd

Mr. Radhakishan Damani hold 34.30% of holding in Avenue supermart while his
family and other promoters hold 40.69% of share holding.
 Mr. Radhakishan Damani was born in
karad a small town in Maharashtra and
raised in a single room apartment
in Mumbai. He studied commerce at
the University of Mumbai but dropped
out after one year. After the death of
his father who worked on Dalal Street,
Damani left his ball bearing business
and became a stock market broker and
investor. He made profits by short-
selling stocks that were inflated by
illegal means by Harshad Mehta in the
1990s. Damani was reportedly the largest individual shareholder of HDFC
Bank after it went public in 1995.
In 1999, he operated a franchise of Apna Bazaar, a cooperative department
store, in Nerul, but was "unconvinced" by its business model. He quit stock
market in 2000 to start his own hypermarket chain, DMart, setting up the first
store in Powai in 2002. The chain had 25 stores in 2010, post-which the
company grew rapidly and went public in 2017.

Board of Directors
 Strengths
 Focus on the long-term: Damani, D Mart’s founder is an investor and hence
the company has concentrated solely on long-term profits. This has resulted
in the company optimizing its returns through a pricing approach driven by
demand.
 Slow scaling: D Mart began on a very low keynote and gradually took its time
to raise the ladder upwards. This gave the company greater leverage and
deeper knowledge of its supply chain, as well as allowing them to better
handle the bottom line.
 Customer-Centered Management Approach : D Mart has a very strong
workplace policy in place and is very open in its interactions with the
employees. They do have a strong relationship with vendors and
manufacturers and are satisfied with stakeholders.
 Discount policy: One aspect that sets D Mart apart from his rival is
its massive strategy of discounting. The store is selling vital items at a flat
discount price that most rivals are unable to match and this has helped them
reach the market.
 Clear distinction based on price: D Mart never adopted the trends set by
other rival retail companies but believed in setting their own trends. Through
a simple price-based distinction they dominated the market and sold their
products at much lower prices than rivals.

Weaknesses
 Focus on other places: D Mart has concentrated mainly on the Western
States and has a very small presence in the South, quite unlike its rivals, who
are present everywhere. That has prevented them from gaining popularity in
the market.
 Slow growth: Nearly 16 years ago, D Mart established much before the retail
boom set a fire in India. However, owing mainly to its long-term outlook, it
has not been able to dominate the market, even as many of the later
entrants.
 Low pricing sustainability: The company has a zero credit policy and so
manufacturers and suppliers offer them a much better deal which is how the
business can afford the low prices that the rivals can not imagine.
 No frills: D Mart follows a No-frills strategy wherever possible the emphasis is
on cutting costs. Their services are central and most upmarket stores lack
the frills. The clients who come here are essentially looking at the low prices
of the items on sale. Therefore the longevity of this differentiator is uncertain.
 Opportunities
 Technology: Technology has a lot to contribute to retailers in terms of in-store
experiences and retailers can use IoT, artificial intelligence, etc. to create
value-adding services for their customers for which they can charge a
premium.
 Service personalization: Consumers are searching for customized services
they are willing to pay extra for. Retailers should expand on this willingness
to pay more and boost the quality of services they offer.
 New Developing Markets: New developing markets and mall culture can be
the biggest opportunity for the company.
 South of India: D-Mart can also open stores in the south and areas where no
store is there.

Threats
 People in large cities, in general, are particularly lethargic about leaving their
homes and often tend to shop online. So, companies such as Amazon and
Flipkart are now big threats to most retailers.
 Online start-ups are the hottest trend in India. Many of these are aggregators
that cost-effectively put the manufacturer and the consumer together. These
companies are the emerging threats more so because in the aggregation
industry many new brands are emerging mainly due to lower entry barriers.
 Global competitors.
 Competition among Best Price & Reliance Retail.
 Unorganized retail is also a big threat.
 Government Policies and regulations related to the retail sector.
 International Players who are willing to open stores in India.
Key Financials
Competitive Analysis

Particulars

Market Capitalization Rs 152622.19 688.31

(cr.)

P/E 117.39 8.41

Book Value 171.90 93.74

EPS 20.09 1.79

Revenue Growth 24.32% 9.13%

Operating Profit Growth 30.31% 24.58%

Net profit margin 5.23 2.58%

ROE 11.74% 21.45%

ROCE 15.98% 18.96%

 Conclusion & Future Outlook
DMart is the largest supermarket of India and has mission to provide best value to their
customer, so they get more value for money than they get anywhere else. DMart provide
products in cheap price and in best quality, this makes the consumers more attractive
towards company. As, DMart works in essential commodities, So in COVID 19 times, the
company’s financials is not much impacted. DMart has future strategy to expand its stores in
eastern part of country. Therefore, DMart many growth opportunities and has bright future.

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