DMart share Business model which is India's most profitable retail chain | Avenue Supermarts Limited

DMart share Business model: One such retail chain which is the most profitable retail chain in India despite its focus on being the lowest price. Avenue Supermarts limited which is also known as Dmart.

About DMart – Avenue Supermarts Limited

This company was started by Mr. Radhakishan Damani, who is a well-known value investor of India, he started this company in the year 2000 and in 2002 he had only one store in Powai in Maharashtra.

This company gradually over 10 years they opened 8 stores. We get to know about their other specialty that they do not believe in rapid growth, they believe that they grow in such a way that we become profitable as well.

That’s why the focus of the company has been so far that all the stores that open, first of all, fortify (strengthen) your position there. Make a name for yourself in that market and capture market share and adopt the model of scale with profitability.

The value of this company is coming from the views of investing value investor Mr. Radhakishan Damani, which is not only due to rapid growth but you should also look at the profitability along with the growth.

Dmart (Avenue Supermarts limited) This company has 234 stores in Several states in India. So not only this company is in Maharashtra but it is present in many such states like Gujarat, Tamil Nadu, Andhra Pradesh, Madhya Pradesh, NCR, Punjab, Rajasthan.

Dmart share price and financials

Dmart	Avenue Supermarts Limited
Dmart Market Cap	3,00,384 crore INR
Return on Equity	9.45%
Net Profit Margin	4.55%
P/E ratio (Price to Earnings)	219
5 year Sales CAGR	23%
Operating Profit Margin	7.86%
Price to Book	23.6
1 year returns	72.8%
Current Ratio	3.27
Debt to equity	0.04

Dmart share price and financials (Source: Avenue Supermarts Limited, Dmart)

Dmart’s revenue:

Revenue of the company Out of all these segments: Food segments contribute approx 57.41%, FMCG contributes approx 19.69%, and remaining general merchandise & apparel contributes approx 22.90% revenue of the company.

If you analyze the company’s growth strategy, you will see that the company has not increased its number of stores very rapidly.

The focus of the company has been to first capture the market share and make it profitable wherever the store is opened and then add more numbers of stores to its chain.

So if you look at the figures of 2002, then they had only one store at that time, in 2014 they went to 89 stores, after that in 2019 they opened 214 stores and till 2020-21 today they have approx 234 stores.

Subsidiary of Dmart Company

Dmart Company has three subsidiaries:

1. Align Retail Trades
2. Avenue Food Plaza
3. Avenue E-Commerce

If we look at the audit finance of these three subsidiaries for the financial year 2020-21, we will find that:

Align Retail Trades: Align Retail Trades, which is the largest segment and the largest subsidiary, had a revenue of Rs 1296 crore and profit after tax of Rs 16 crore.

The company started a subsidiary called Avenue E-Commerce in 2020, in which you can order goods through DMart ready app or you can also order goods by visiting DMart.in website.

You have the option that either you select the option with self-pickup or you can also choose delivery.

The company has converted 2 stores in Mumbai into fulfillment centers and currently has a presence in 7 cities including Mumbai, Ahmedabad, Pune, Bangalore, Hyderabad, Surat, and Vadodara.

Avenue Food Plaza: The Avenue Food Plaza subsidiary had made a revenue of Rs 15 crore, out of which the loss was Rs 2 crore.

Avenue E-Commerce: Avenue E-Commerce had made a revenue of about Rs 793 crore, in which they had a loss of Rs 81 crore.

Business segments of Dmart

Dmart has many sub-brands like D Mart, DMart Minimax, D Mart Premia, D homes, Dutch Harbors, etc. Dmart Company has three Business Segments:

1. General Merchandise & Apparel
2. Product segment
3. FMCG

General Merchandise & Apparel: The first is General merchandise & apparel in which footwear, clothing, plastic items, metal items, toys, etc. are sold.

Product segment: In the product segment, they have a category of foods, under which they sell dairy products, flour, pulses, and many other food items including packaged food, fruits-vegetables, etc.

FMCG: The third category is that of FMCG products, which includes home care products, personal care products, etc.

Pros of Dmart Company

The brand value of the company is very good despite them consistently focusing on giving value to the customer.

How to give value to the customer by the consistently low price, that means even in a very competitive price market it will give value to the customers without any debt.

Dmart can profitably run the company, this is also happening because they do not believe in very rapid growth.

The company believes that if the company opens a store in one place, then strengthen your position at that place by capturing the market share and then grow in terms of the number of stores.

Cons of Dmart Company

The company is competing with Reliance Retail which is its biggest competitor and it is not easy for any company to compete with a big brand like Reliance in any industry.

Apart from this, this company is very late in the e-commerce segment because at such times Amazon, Flipkart, Swiggy, Zomato are all coming in grocery delivery.

At that point, it is not an easy task to make them profitable and achieve the same level of scale and maintain their brand.

At a time when a lot of Venture Capital Asset Finance and Startups are coming up to capture the market in this very competitive market.

Keeping all this information in mind, despite a lot of competition, you will be surprised and probably happy to know that DMart (Avenue Supermarts limited) is the only company that is profitable at this level in the retail segment.

This company has strong management, strong brand presence and its focus is on Financial Fundamentals and Value Creation.

Overview of the Retail Industry

10% of India’s GDP is contributed by the retail sector, 8% of the employment force is employed in the retail sector.

Apart from that Compound Annual Growth Rate if we look at the growth of this industry then it becomes 9% that by 2030 this is expected to grow to the size of 1.8 trillion dollars in India.

Out of which 60% contribution will be from food products only.

This was the retail sector, now let’s look at e-commerce, how commerce is growing.

You will see that E-commerce is growing rapidly in India for several reasons, one of which is that people’s income is increasing, urbanization is increasing and consumer is becoming quite a brand.

That’s why it makes a difference to them that from which app they are ordering and what type of product, which brands of new product is available on that app, all this is also happening because consumer finance is increasing a lot in India.

And one is the logistics infrastructure, it has become very widespread in the country in the last five years, which means things like fast delivery, and 10-minute delivery is increasing very much because many e-commerce brands and logistics company are trying.

That company could deliver the product to every area and every pin code in India.

Apart from this, the government is also reaching out to FD norms a lot so that a lot of foreign funding can come in the e-commerce segment, for this reason, this sector is growing very fast, which is going to become a very important part of DMart.

This article is only for education purpose and the author has his own views and research, so if you invest in these stocks then do it at your own risk and do the research yourself before investing.

FAQ

How are the share price and financials of Dmart?

Revenue of the company Out of all segments: Food segments contribute approx 57.41%, FMCG contributes approx 19.69%, and remaining general merchandise & apparel contributes approx 22.90% revenue of the company.

Which is the Subsidiary of Dmart?

Dmart has many sub-brands like D Mart, DMart Minimax, D Mart Premia, D homes, Dutch Harbors, etc. Dmart Company has three Business Segments:
1. General Merchandise & Apparel
2. Product segment
3. FMCG

Which products come under Dmart’s subsidiary?

General Merchandise & Apparel: The first is General merchandise & apparel in which footwear, clothing, plastic items, metal items, toys, etc. are sold.
Product segment: In the product segment, they have a category of foods, under which they sell dairy products, flour, pulses, and many other food items including packaged food, fruits-vegetables, etc.
FMCG: The third category is that of FMCG products, which includes home care products, personal care products, etc.

When and who started the Dmart company?