Hi,
I’m not an expert but here are my answers. If a stock is too volatile (either price move up/down too fast), exchanges move them to T2T. If a stock is in T2T intra day trading is not allowed. This is to control the stock volatility, recently D-mart and IRCTC are moved in T2T and once their volatility reaches the normal level they are moved and this is a common practice by exchanges.
Hi
Would suggest reading the official documentation here
https://www1.nseindia.com/products/content/equities/equities/mrkt_segment.htm
Please click the T2T segment to expand and read.
Rgds
Dmart moved to A group from T2T group.
Jiomart launched
It is just Reliance mart rebranded.
I guess JioMart is too much hyped, it’s doesn’t even shows the expected date of delivery, hours, days, weeks!
I don’t see why people would order from here!
Some pointers given in this article by management on the difficult times ahead.
Need help from the community here.
Q1: why proceeds from QIPs(~4000 cr) are shown under Financing activities.
Q2: Proceeds from QIP are shown under investing activities(~3200 Crs)
Q3: Realisation from QIP FDs are again shown under invesing activities(~130cr)
Q4: Will these things move to assets(Net cash with banks) next year ? in cash flow statement
Thanks in Advance
Above slide seems to highlight most of the concerns for Dmart
Growth in total bills cut have slowed down - It had increased by 28.35% in previous year and growth in current year is 16.86%
LFL (2 Yrs) is lowest since inception & approaching single digit
Revenue generated per sq ft area has also seen de-growth for he first time (even though if we discount it for disruption of 9 days in march’20)
few key points
My rough calculation says that net revenue in 2 months (Apr’20 + May’20) of current quarter (Q1) will be approx 2000 Cr … it indicates that Q1 revenue will be around 50% of Q4
Revenue has gone down from 6809 cr (Q3) to 6290 cr (Q4) - we must note that the covid impact in Q4 was 8-10 days only… in normal circumstances they should have improved the numbers.
YoY - it may look better due to good performance in first 3 quarters but that is already priced in
Total store addition is encouraging as its highest no in any quarter - 18 stores in Q4 alone (they will start contributing along with covid relaxations)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) in Q4 FY20 stood at Rs. 417 crore, as compared to Rs. 372 crore in the corresponding quarter of last year. EBITDA margin is at 6.7% in Q4 FY 20 as compared to 7.4% in Q4 FY 19.
Net Profit is at Rs. 271 crore for Q4 FY20, as compared to Rs. 192 crore in the corresponding quarter of last year.
PAT margin improved from 3.8% in Q4 FY19 to 4.3% in Q4 FY20.
Basic Earnings per share (EPS) for Q4 FY20 stood at Rs. 4.25, as compared with Rs. 3.07 for Q4 FY19.
Total Revenue for FY20 stood at Rs. 24,870 crore, as compared to Rs. 20,005 crore in FY 19.
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) in FY20 stood at Rs. 2,128 crore, as compared to Rs. 1,633 crore during FY19.
EBITDA margin improved from 8.2% in FY19 to 8.6% in FY20.
Net Profit of Rs. 1,301 crore for FY20, as compared to Rs. 902 crore in FY19. PAT margin improved from 4.5% in FY19 to 5.2% in FY20.
Basic Earnings per share (EPS) for FY20 stood at Rs. 20.71, as compared with Rs. 14.46 for FY19.
Mr. Neville Noronha’s comments:
Overall, FY 2020 saw a healthy 24% revenue growth while PAT margins were in line with expectations. Our LFL growth for FY2020 was 10.9%. Two reasons for this. One is that stores that are more than 5 years old grew at a rate lower than the previous year and most of the stores that are younger are peaking faster, even before they qualify for the 24 months LFL measurement. We opened a record 38 new stores, 6-8 of those stores should have actually opened last year.
Hi
A few data points I track for Dmart updated in the charts below.
Most number of yearly store additions
Revenue per sq ft drops. Cagr of >10% in sales/sq ft growth since FY12.
Started with 1 store in FY03
Good to see hardship allowance for employees and transparent commentary on covid situation.
Rgds
What is your assessment of future performance keeping in view the current prices?
I checked price of most of items on Jiomart - It is lower than D-mart (https://www.jiomart.com/) Looking at Jiomart competition (after joining hands with whats app/Facebook) lets have your views on following -
(1) How the EBITA margin and growth of D-mart will sustain going forward?
(2) Consumer behavior after COVID-19 -“Buy more online than visiting physical store”, will have more benefits to Jiiomart than D-mart.
(3) Increasing efficiency of order collection and distribution through new Jio platform with whatsapp. - How it will impact D-mart?
One should be cautions about Reliance’s execution and competition killing capacity. When reliance launched Jio, existing telecom players did not take it seriously but now many wiped out from the market!!. Will similar could happen for jiomart?
One thing is sure - there will not be free run for D-mart. Current valuation of D-mart is for its Quality Growth with strong balance sheet. However, if going forward, growth slows down, margin contract, PE will get de-rerated / there will not be significant return from investment in D-mart due to long period of consolidation in stock price!
(Disc - Invested during IPO time, sold last week. Now no holding. Hence, my view might be biased !!)
There are a few big risks here:
D Mart is not a technology company. Difficult to have a 50B Dollar valuation in Grocery Retial while not pivoting to a technology driven platform in 2030. Taking 50B valuation sine if someone is buying here they would hope for it to double in 10 years atleast.
Reliance is also not a tech based company. But they have that covered with Facebook’s partnership.
Jiomart is going to be a very successful proposition once bundled with Facebook Shop and Whatsapp.
Amazon and Flipkart both are going to go big in grocery.
It can be said that Dmart caters to a segment who is not looking for convenience but for price.
But it is not a given that Reliance and Amazon will not be able to match them in price.
Paying 100X for Dmart is pretty dangerous IMHO.
Due to lack of movement and few shops being open due covid, we are also resorting to online ordering through big basket etc now a days whereas we were buying from Reliance retail /Big Bazar earlier and from D Mart when I was in Mumbai .I have found D mart to b the best followed by reliance retail and big Bazar the last in preference.I have checked zeomart rates and find they are equivalent to other online platform and items like pulses are at least 30% higher than their regular price. All online stores have raised prices by 30-40% and are delivering the lowest quality of locally packed products. Therefore the cost with quality conscious customers would revert back to physical stores once Corona pandemic is over.
As far as reliance and D mart are concerned, D mart quality superior and prices lower to reliance, hassle free billing adds to the value customer derives. Zeo mart is basically delivering reliance retail products through zeo mart and will not be able to compete in quality/price against D mart. Since big Bazar is also not in good financial shape, a large customer base is likely to shift to D mart, wherever their stores HV bn opened.
I am personally waiting for D mart to open store in Noida and would love to buy from it. The only question is how fast D mart can have it’s presence in cities where it does not exist currently.
Disc:invested in Ipo and in offer for sale
Remember, Amazon has been there in grocery for few years now, same with Bigbasket and BigBazaar and Reliance Fresh. However DMart has continued to grow and grow at good rate…don’t see that getting impacted with JeoMart. The imprint they have on minds of customers is unmatchable. They are doing something extraordinary. The hardship allowance to employees recently is on same lines. In Ahmedabad, I heard…In places where Reliance Fresh and DMart exist in close proximity…DMart stores are preferred ones. With high number of store additions(~38) last year…even though first couple of months have got impacted, I feel DMart may surprise with reasonable growth this year too and next year may be super-excellent on low base. Just my views.
Looking at your post, I tried to compare price of Jiomart with D-Mart Ready(Online delivery platform of D-Mart). I have purchased some items from Amazon in the morning (Generally buy online from Amazon as D-Mart store is far from my home) , so I thought of comparing them. Here is result that I got:
| Item Name | Amazon | Jiomart | Dmart |
|---|---|---|---|
| Patanjali Ghee, 1 Ltr | 550 | Not Available | 526 |
| Himalaya Anti Hair fall Shampoo - 400 ml | 184 | Not Available | 190 |
| Aashirvaad Mutigrain Aata-5 Kg | 288 | 279 | 255 |
| Dhara Kachi Dhani - 1 ltr | 150 | 147 | 143 |
| India Gate Basmati Feast Rozana - 5 kg | 389 | 389 | 399 |
Clearly , D-Mart has the lowest price for most of the items. Going forward I will order from D-Mart Ready only as I did not know that they deliver to my location. Most of the items are not available on JioMart, hence there is no point in buying from there. Amazon can be backup option , since they are also having lowest price for some of the items.
Coming back to D-Mart as a stock , I fell in love with the company as soon as I read the DHRP. I applied in the IPO , but only got handful of shares. I bought significantly on the day of listing and still holding them. Last year (FY20), they opened 38 stores i.e. 20% growth in number of stores. Even with 10% SSG (which is lower than the SSG they have accomplished in prior years), they can grow at 30%.I think D-Mart is the only non-financial company listed in India (with good corporate governance) that can grow at 30% for a sustainable period of time. Having said that , this quarter revenue can fall by 30-40% due to Covid19. Profit fall can be even steeper.
I will not sell as long as I think company can grow sustainably above 20%, which I think will happen after the lock-down is lifted…Other reason for the selling D-Mart can be deteriorating price action. More often than not, price action gives you early warning signals about the upcoming troubles with the company and vice versa.
Disclaimer : My views may be biased since I am holding D-Mart
The fundamental question here is why majority people go to Dmart, it’s only and only because of its price. Not for quality and not for convenience. Infact those were never selling point for Dmart. Now when someone else start giving same price with either more convenience or quality people will shift in no time to other provider. Amazon and Flipkart could not beat Dmart on pricing but if new entrant could match the pricing with addon convenience then it will be threat to Dmart
BTW — Not only Amazon and FlipKart , but also Reliance Fresh - all have failed to stop the Dmart bandwagon so far.
D-Mart and Jiomart - both could co-exists. However, is PE more than 100 is justifiable for D-mart in view of new competition and change in customer behaviors ? Let’s think on this aspects -
(1) No one go to D-mart based on its brand value! but people buy different brand available at discount from D-mart
(2) Are people go for life pleasant experience at D-Mart? no one go for it but go only for buy the stuff at discounted prices. On the contrary D-Mart stores are congested and not well managed for pleasant buying experience !
(3) So, lowest price /discount prices is the only positive point for D-mart.
(4) How D-mart provide low cost? Because they are negotiating well with brands and get discount from them and pass it on to customer. now think on this point -
(a) If Jiomart has excellent network of Whatsapp+Facebook - MNC/good local Product Brand visibility will be more through Jiomart compare to D-mart . Hence, MNC / FMCG brand could make their brand more visible through Jiomart without much advertisement and saving of advertisement cost could pass on to Jiomart in form of discount. There could be fear of loss of market share of their product if they don’t joint Jiomart, hence, most of MNC/good FMCG comanies would be happy to have tie-up for product selling with Reliance Jio evenwith tough condition set by Jiomart!! (https://economictimes.indiatimes.com/markets/expert-view/fmcg-giants-need-to-worry-more-about-facebook-jio-deal-rajiv-sharma/articleshow/75343696.cms)
(b) Network / pull of customer is more important for online platform. Reliance Jiomart will get ready made customer network through whatsapp/facebook. Now they only have to bargain with suppliers for getting more discount and we now how tough Reliance is when it comes to bargain from supplier!!
(c ) FMCG companies such as HUL, Nestle, ITC and others: If JioMart grows rapidly and uses its newfound heft to aggregate orders and approach FMCG companies for better terms, there could be some impact on the margins of these brands. This is much the same way they had to adjust their margins with the onset of modern retail and ecommerce. But the impact of this would not be massive.
https://www.cnbctv18.com/technology/early-notes-on-jio-facebook-deal-implications-and-the-second-order-effects-5754781.htm
