D-Mart making highlights since its IPO
in market. D-Mart is in the business of Supermarket. D-Mart was incorporated in
2002 by Radhakrishan Damani. He is also known as Guru of Most famous stock bull
Jujhunwala. D-Mart is also known as Avenue Supermarkets limited. It is a Mumbai
based company. D-Mart is most profitable among various F&G companies.
Now Let’s Know about the company:-
(i)
It has 112 outlets in India
across 41 cities in India.
(ii)
It has distribution and
packing centres, Company has 21 distribution centres and 6 Packing centres in
Maharashtra, Gujarat , Telangana and Karnataka.
(iii)
There are following promoters
of the company:-
a.
Radhakishan S. Damani;
b.
Gopikishan S. Damani;
c.
Shrikantadevi R. Damani;
d.
Kirandevi G. Damani;
e.
Bright Star;
f.
Royal Palm Trust;
g.
Bottle Palm Trust;
h.
Mountain Glory Trust;
i.
Gulmohar Trust; and
j.
Karnikar Trust
(iv)
Company financials are very sound
as company profitability has been increased from 604.06 crore to 3212.07 Crore
and Total assets increased from 11908.76 crore to 31001.94 crore also revenue
increased from 22224.09 crore to 86061.05 crore in year 2012 to 2016.
(v)
Company IPO price:- 299 Rs/ Share
at face value-10 Rs.
(vi)
IPO Subscription:- 104.48 times
Company Share listed at 604.40 Rs/Share i.e. more than double
the issue price.
While comparing it with other retail companies for Fiscal
year 2016, Kishore Biyani group Future retails has put up profit of 14.55 crore
and annual revenue of Rs. 6845 .
For RPG Group owned Spencer’s Retail posted Rs. 168 Crore
Loss on revenue of Rs. 1881.31 crore. In Same period D-Mart made profit of Rs.
320 Crore and Revenue of Rs. 8600 Crore.
Reliance Retail much larger retailer and sells everything
from electronics to jewellery posted profit of 302 Crore but on back of strong
revenue of Rs. 18399 crore. Revenue of Reliance retails are more than double
than D-Mart.
Business
Model of D-Mart:-
(i)
D-Mart keeps its business
Model to Food and groceries while most of other companies has moved to High end
electronics, Jewellery and watches. Company has remains intact to its business
model. Company has business model very much similar to Walmart.
(ii)
Company also remains away
for creating products of their brand, like future retails and Trent. Although
it is very lucrative market to get launch own products.
(iii)
Company works on the
principle of selling the products at lower than MRP prices. This will in-turn
getting great inventory turnover ratio. This high inventory turnover ratio is
used to negotiate with wholesalers to get products at lower prices.
(iv)
D-Mart offer products 6% to
12% cheaper than what they will find at other stores. In some cases, certain
products will be 10% below MRP.
(v)
D-Mart never open a store
in Mall where rentals and cost of acquisition is very high, while other competitors
open their stores in malls.
(vi)
D-Mart wasn’t in hurry to
do expansion. While other retailers are experimenting of opening over different
geographies. D-Mart sticks
to what it knows best. It uses one of two formats of stores whose size is
calculated based on location and shopper density. The company is also extremely
reluctant to expand geographically. Until 2014, it had stores only in four
Indian states. Over the last three years, it has expanded into five more states
but is still conspicuously absent in the NCR region and other high consumer
spending states like Tamil Nadu. Analysts point out that it follows a principle
of opening 75% of its new stories in existing states or markets and plans on
staying true to this in the coming years.
(vii)
In its 15 years of operations, it has never
closed, moved or shut down a store.
(viii)
The company has spent over
Rs 23 billion on acquiring land and buildings but either owns most of its
stores or has them on a 30-year long-term lease.
(ix)
A recent ‘Yes Securities’
analyst note points out that D-Mart’s rental costs are only 0.2 per cent of
total sales compared to 8 per cent for Biyani’s Future Retail.