Visited the store specifically today to scuttlebutt.
Special thanks to @sujay85 for encouraging to visit . Basically the concept is I believe they are trying to reach everywhere and they are even taking smaller places where place is not available/affordable . The range of products is less than normal store of course but it was crowded though its initial days . On the first look , store seems having good response and like the way they experiment .it also works in not so posh localities where they can sell not very premium stuff and still reach out . Si its mini store max saving ( minimax). Heard that they are getting lots of request from customers to open stores in their areas . This is very encouraging.
Saw some private label products racks also .
So I agree that these companies like dmart , bfin , titan penchant to experiment small make them stand above others and hence DCF/pe ratio might not be right method to value as it has lot of hidden optionalities
Disc- invested . Views may be biased . Am not a sebi registered advisor and this is not a buy/sell recommendation
Thanks. That’s v helpful. Any feedback from forum members on Reliance Smart stores would be v much appreciated. Having a look at the below video, it appears as if RR is trying to imitate the look, feel, layout, BOGOF offer, Naked ceiling ducting to save costs including the font size of the price labels. Having met the management team twice at the AGMs and other occasions, it may be extremely difficult for anyone to even come close to ASL’s culture, we cannot ignore that RR is headed by Damodar Mal who once along with RKD had leased Apna Bazaar stores before starting D-mart. Need to keep a close watch on RR.
how are they using this QIP money…will they expand to other parts in brisk pace? anything on this from management?
I shop at Reliance Smart for small purchases to avoid crowds. I can share some feedback but it’s just one store feedback. I might also be biased due to being Shareholder of Dmart, so take my post with pinch of salt.
Reliance Smart prices are lower than Big Bazaar. They offer minimum 6-7% discount. But the big ticket offers of Dmart (like on 2/5 kg detergent or big nappy pack) are far better. Pricing wise I would rate Dmart > Reliance > Big Bazaar
I see many private labels. Have purchased their products competing with Lizol/Harpic and found them below average quality. Their private label face tissues are good though.
Billing is in huge contrast to Dmart. Reliance Smart billing counter takes you much more time despite far lower crowd. The counter people are always roaming around doing time-pass or take lot of time in processing due to additional checks on some item prices etc. Dmart counters processes 3 customers in time it takes Reliance to process 1. Customer ends up spending same time in both Dmart and Reliance stores due to this.
The main purpose of QIP (& following OFS - yet to listen from management) is to abide by regulatory norms of promoter share holding.
D’mart proposes to utilize the net proceeds to augment long-term resources for financing expansion plans, which include funding expenditure towards implementation of strategy on expanding their store network and increasing the efficiency of supply chain network, including warehousing facilities and related acquisition of land.
The funds will also be used for strategic investments or acquisitions as well as to repay loans.
They intend to further enhance their position in the retail supermarket business in Maharashtra, Gujarat, Telangana, Andhra Pradesh and Karnataka by increasing market penetration and expanding store network in these states. They also intend to strengthen store network in Madhya Pradesh, Chhattisgarh, Tamil Nadu, Rajasthan, Punjab and NCR.
I agree with your observations on Reliance SMART. That is true for all Reliance formats including FRESH. I have seen that in Hyderabad and Pune. Reliance has a ridiculous touch screen based system, operators have to choose the MRP out of multiple choice present shown in system. Why not autochoose the lowest MRP? Their offers are like it is wholesale store not retail e.g buy 3 get 1 free. That is 25% off but then how many people want to buy 4 packets of same variant of biscuit. Agreed they intend to move volumes, but I don;t want to haul all items to counter to check if I buying one will get 25% off. Very often the billing system don’t recognize the offers, then you spend more time asking operators to check.
On top of this, they have a reward program which used to be card based which was replaced by asking customers for their mobile numbers. Swiping card was error free and took <1sec, verbally telling operator takes atleast 10sec and one wrong digit sends your reward to another member. In a high traffic and high frequency grocery store it is a receipe to slow down.
Dmart checkout is friction free. Their PoS system is not fancy, infact I believe it is based on windows XP, barcode is scanned and price appears, no need to select MRP. Their offers are simple, buy 1 get 1 offers is applicable to even 1 item because system is set to read that as 50%. No reward program to keep track. No wonder they are so efficient with their stores.
QIP completed successfully at 2049/- per share
https://www.bseindia.com/xml–data/corpfiling/AttachLive/62610dc3-7f4a-4247-9f42-d7db57838b4e.pdf
There are 137 allottees and following have got more than 10 lac shares
Well captured It is league apart from it’s peers it is more business model Like McDonald Burger . WHICH WAS CONSIDERED AS BURGER COMANY is actually a real estate business , The real game is head i win and tail i don’t Loose is not RETAIL but the Real-estate which most of folks missed and continuing arguing about high valuations and margins The real Game changer is invested capital in the Brick and wall Business units which eventually at low level by getting the QIP money the promotors will invest in high VALUE key business units .
The business blood line is Money and the Mr Damani has tapped at the best time ( Timing may not be proved perfect as plenty of upside potential lies but at good time ) that to infused the same as booster dose to the business .
Regards
Disc : Not invested studying and waiting for correction as fully invested .
Now promoter holding has come down to 77.27% & they need to offload 2.28% more in next one month (probably through OFS)
I had been to newly opened RR in Bglr and can definitely say they have good offers compared to old format stores; but still the pain point of cash counter remains.
Cash counter guys toss the customers like ping pong ball; and close the counters as per their wish (or may be store manager’s wish).
P.S: Damodar Mall has to experience RR once - before thinking to compete with Dmart.
Hi
I wanted to share my observations and readings on the this sector in a different geography.
I happened to be staying in Australia for a little time and have been observing retail grocery chains in the country. I also had a point of reference to over 6 years ago when I was in Australia back then.
Earlier the market was a duopoly and now its opened up to more number of players. The new entrants specifically the likes of the German Aldi has undercut in pricing to gain market share. Despite this surveys for the industry rank true pricing as only the 3rd important criteria. The most important factor is ‘value perception’.
Aldi is rated inferior to the bigger two Woolsworth and Coles (the earlier duopoly) in terms of checkout experience, quality and convenience. Back in 2012-13 they had more transactions (perhaps 80%+) via NFC payments. But where Aldi is snatching market share is in bringing products which were not in the market and there is a perception that value is associated with shopping at their stores. Consumers in this country are not loyal and they frequently switch between the stores.
Despite being a developed market with one of the highest per capita incomes the online business is quite poor here. I have not heard of people getting home deliveries and even seen any delivery boys around. Few startups exist but most of the shopping is in stores. Even in peak times I found the stores quite ok since I have seen back home in Bangalore how stores can get packed 
I somehow feel the true comparison for Dmart would be an environment like down under and us making comparisons to Costco is perhaps not ideal from a business model perspective.
Rgds
Deepak
Agree Dmart has a long way to go before being compared to Costco but Dmart is not just about checkout experience . its one of the factors . it has razor sharp focus and doesnt provide all varieties of products but limited products but strive to give cheapest mostly in their range of products . its the only one to expand carefully as opposed to lot other who are there expanding mindlessly or have gone back . Besides it has the best roce as compared to peers and seeks to up the turnover part instead of margins thereby improving roce by more turns and keeps competition in check . Besides they have started introducing lot more newer products compared to competitors to improve the margins and basically know when to push where . Dmart experience is a lot more than just the billing etc . Agree that true test would be in environment down under (like low demand in developed economies) but thats a thing atleast a few decades away for our developing country with great oppurtunity size . Currently we have a lot of scope to grow unlike developed economies and hence Dmart has great scope provided they continue doing what they do without making blunder . Plus our population is more cost sensitive than the developed world .
Disc - Invested
great point . Agreed that here its just not the scarcity but also the business quality thats creating demand . Plus the discipline with which they have built their business brick by brick as compared to many of their peers. there was some comparison earlier that future too had great valuations and then came down as float increased , however the financial metrics of dmart are currently superlative way above peers .
https://www.business-standard.com/article/companies/what-makes-dmart-tick-ability-to-extract-more-from-less-say-experts-120020900823_1.html
Disc - Invested . This is not a recommendation and am not a sebi registered advisor .
Radhakishan S. Damani, Gopikishan S. Damani, Shrikantadevi R. Damani and Kirandevi G. Damani (the “Sellers”), being certain promoters of Avenue Supermarts Ltd (the “Company”), propose to collectively sell up to 1,48,00,000 Equity Shares (representing up to 2.28% of the total issued and paid-up equity share capital of the Company) (“Offer Size”) on February 14, 2020 (“T Day”) (for non-Retail Investors only) and on February 17, 2020 (“T+1 Day”) (for Retail Investors and for un-allotted non-Retail Investors from T Day, who choose to carry forward their bids), (the Equity Shares forming part of the Offer Size will hereinafter be referred to as the “Sale Shares”), through a separate, designated window of BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE” and together with BSE, the “Stock Exchanges”).
- Date and time of the opening and closing of the offer :
The Sale shall take place over two trading days, as provided below:
For non-Retail Investors on T Day, i.e. February 14, 2020
The Sale shall take place during trading hours on a separate window of the Stock Exchanges on T Day, commencing at 9:15 a.m. and shall close at 3:30 p.m. (Indian Standard Time) on the same date. Un-allotted non-Retail Investors who have placed their bids on T Day may indicate their willingness to carry forward their bids to T+1 Day (defined below), for allocation to them in the unsubscribed portion of Retail Category (defined below).
Please note that only non-Retail Investors shall be allowed to place their bids on T Day, i.e. February 14, 2020.
For Retail Investors (defined below) and for un-allotted non-Retail Investors from T Day, who choose to carry forward their bids to T+1 Day, i.e. February 17, 2020
The Sale shall continue to take place during trading hours on a separate window of the Stock Exchanges on T+1 Day, commencing at 9:15 a.m. and shall close at 3:30 p.m.(Indian Standard Time) on the same date.
Please note that Retail Investors shall be allowed to place their bids only on T+1 Day. Further, those un-allotted non-Retail Investors who have placed their bids on T Day and have chosen to carry forward their bids to T+1 Day, shall be allowed to revise their bids on T+1 Day as per the SEBI OFS Circulars.
(T Day and T+1 Day, collectively referred to as, “Sale Dates”)
- Floor Price :
The floor price for the Sale shall be Rs. 2,049 (Rupees Two Thousand and Forty Nine only) per Equity Share (“Floor Price”).
No discount is being offered to Retail Investors.
How does a retail investor figure out the best price to apply for the OFS?
You can see the bid price and progress at real-time here.
The floor price has been replaced by cut off price and retail investors would be allotted at RS 2316/- and above only as per bse website
PL read as RS 2316/-
Yes, it’s 2316 and I realised after posting it.of you open bse website ofs section of avenue supermarts, I will find it.ley me try to post the link, but it’s definitely there
This price is too high which we might get in open market easily. What is point in applying for OFS. They might be capitalising the market fancy to the full extent.