Everyone should have a view on valuation and here are my views -
I have taken a PE exit multiple of 20 after 30 years and assumed an average growth of 15% over a 30 year period. I think one can take a 30 yr time horizon in this case but such long horizons are not suitable for a majority of investments. These views are based on my subjective assessment of the sustainability of the supermarket format in India where D-mart has a clear headstart.
This is also a winner-take-all situation where a product or service which is only slightly (1%) better then the competitors gets a disproptionately large (90%-100%) share of or all revenues for that class of products or services. These situations are often found in retailing but at a local level.
This situation is found in real estate very often where a project that is only slightly better compared to other projects in that location gets all the customers. However unfortunately for real estate - it is not sustainable as the next project may not have these characteristics. The continuity is missing in real estate else it would also become like that.
Coming back, I am not saying that this is a 100% winner take all situation but it certainly has that flavour. This is the reason for taking an average EPS growth of 15% over a 30 yr period.
Another thing that is also worth looking into is the consumer behavior aspect - once a buying pattern is established and a perception of low prices is formed it is difficult to dislodge this perception. The demographic that DMart caters to are characterised by frugality and when frugality meets low prices in a winner take all situation one can expect sustainability extending long into the future. I also think that the housing for all mission will be a great thing for Dmart as population distribution patterns are going to change with this initiative creating favorable conditions for Dmart.
In my opinion looking at prevailing PE ratios is not suitable in situations such as this which are sustainable for a long period of time.
These are my views and i am not invested in Dmart.