DMart is now a ₹2 trillion company – Radhakishan Damani has many more cards to pull, the first being e-commerce

• One of India’s largest retailers, DMart has seen its share price grow by 35% in the last one year, going beyond its pre-COVID levels.
• DMart has shown that it has broken away from the COVID-19 inflicted pain, as it posted a 16% rise in net profit of ₹447 crore for the December quarter.
• The company is also slowly gaining traction with its e-commerce vertical DMart Ready.

Radhakishan Damani, India’s second richest man, has a lot to be happy about as his retail venture DMart has now crossed ₹2 trillion in market cap.

One of India’s largest retailers, DMart, registered as Avenue Supermarts Ltd, has seen its share price grow by 35% in the last one year, going beyond its pre-COVID levels.

DMart has shown that it has broken away from the COVID-19 inflicted pain, as it posted a 16% rise in net profit of ₹447 crore for the December quarter. Its revenue was also up 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 dated February 8.

Additionally, DMART through its FY20 QIP had raised ₹40.78 billion, out of which ₹25.43 billion remains unutilised.

“DMart is strengthening its presence in the Western and Southern region. We are witnessing a complete transformation of retail – from unorganized to organized. 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 told Business Insider.

DMart Ready – slow, but steady

DMart is also slowly gaining traction with its e-commerce vertical DMart Ready.

Neville Noronha, chief executive and managing director of Avenue Supermarts in a statement during its third quarter results said that the company continued with the soft launch of DMart Ready in select pin codes of Ahmedabad, Bangalore and Hyderabad. Within their brick and mortar stores, they have also leased space for Avenue E-Commerce Limited (AEL).

A quick sweep through professional networking firm LinkedIn shows that DMart is also hiring actively for its e-commerce venture.

“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.

Billionaire Damani gets richer

Damani, who is also one of India’s biggest stock traders, launched Avenue Supermarts that runs DMart chain of stores in 2000. Since then, he has grown DMart to one of India’s big retail companies giving competition to Mukesh Ambani’s Reliance Retail. Damani has also accumulated wealth in the process being second only to Ambani in India’s rich list.

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