Remember as long as market perceives that company can have a secular growth at significantly higher rate than the average growth, valuations does not fall. You take the example of Page , Eicher in 2015 or Infosys in 2000. Valuations came down only when growth of these companies slowed. I think D-Mart is enjoying TINA (There is no alternative) factor. I know valuations are high , but it will not come down as long as the market perception of secular high growth does not change.So, I will wait to see , if JioMart is able to make significant dent either on margin or growth. I do not want to be early seller and wonāt mind selling it at 20% lower price , if the competitive intensity impacts the business of D-Martā¦
I think we must understand one thing, no one can stop the other and none has the intention of doing that either. It is only us investors who probably thinking like that. Nothing wrong in that, but market is huge for all players. Imagine none of us even mentioning Trent here while star has been galloping like a horse. Retail is not telecom where a new incumbent can kill others in short span and capture all market share. Retail is not technology either where digital kills legacy in matter of monthsā¦Indian kiranas were written off when big bazar had set foot decade or two backā¦today kiranas will tie up with jio to make jio relevant.
It will be very long fight and I am sure mr damani is as ready as he has always been.
Disc. As before, applied for decent IPO lots but got none, tracking ever since and lookout of opportunity to enter. Wish it was not in T2T segment when market collapsed in March. Hold Trent in core portfolio though.
What my personal opinion is that Jiomart will create competition for other online players not for brick and mortar players.
We would like to do online shopping for small ticket size and standard items only. When it comes to large ticket size items like AC, Refrigerators or General Merchandise & Apparel etc. people generally prefers to buy at physical stores.
I too bought my AC, iPhone and iPad from croma even though it was available online at 5% discount.
This is my personal opinion with what I experienced
Disclosure: Holding Dmart share.
As per my observation Jiomart is offering discount of 5 to 10% on branded products which is much less than what Dmart offers.
For online delivery trust needs to be established like Amazon, Bigbasket etc have garnered
As per my personal experience Reliance is not very efficient in consumer facing businesses you donāt need to go by words just visit Reliance trends or Reliance digital store near you
moreover people living in Gujarat and Mumbai can vouch for the lowest prices offered by d Mart
D-Mart business model is simple - Pay vendors fast (8-9 days) such that they can offer items at lowest price, Keep only fast moving items to optimize inventory turns (14-15 times) , Open stores in cluster to optimize supply chain and save on rent by having own stores (majority of stores are owned by them). As per my calculation done some time back , Big Bazaar need to sell itās items at a price atleast 15% more to match the EBIDTA margin of D-Mart. Thatās the kind of moat that D-Mart has. When I did this calculation Big Bazar was one of the main competitor of D-Mart. Now, looking at the situation of Fortune group, I think D-Mart and other retail companies will gain more market share.
Now research reports reducing target prices -
Avenue.Super_Prabhu_2405020.pdf (921.8 KB)
Today, hit lower circuit - only sellers
research report follows results and market fall and is more like rating agencies . Most of these give positive research reports start coming when price start going up irrespective of valuation .Research reports follow market and market follows research report and its a vicious circle . An expert from a top brokerage house on an TV channel recommended a top bank to be a best buy at its 52 week high and few weeks back , after it fell significantly , said its quite costly and not worth buying. I am not saying whether one must buy or not or sell , but my point is a lot of these research reports , while useful to study the nitty gritties , the targets are best taken with a pinch of salt and can never be taken to be stock valuation barometer
Someone had mentioned dmart was out of t2t segment, but still it has a 5% circuitā¦is it still in T2T? There are so many other more volatile stocksā¦not able to understand why such a large cap firm is having 5% ckt
I understand regulators had mentioned a particular date for moving the scrips out of T2T & other changes. Certainly such changes donāt happen overnight. Hopefully this will be implemented in current week itself.
It will move back to the āAā group tomorrow.
The scrips mentioned in Annexure III are in T / XT Group and are traded and settled on trade-to-trade basis as part of surveillance measure. These scrips will be shifted back to their original groups from May 27, 2020 and will continue to attract the circuit filter of 5% or lower as applicable and will be reviewed for upward revision during the next price band review activity.
https://www.bseindia.com/markets/MarketInfo/DispNewNoticesCirculars.aspx?page=20200521-32
There has been many points here on Dmart vs JioMart, first and foremost Jiomart is just starting and we need to see how they efficiently manage the logistics & get lowest price from the FMCG players and still maintain the prices. Also Jio will be first giving competition to the Amazon, flipkart & Grofers etc. If you notice even though at times the Amamzon was giving low prices it could not affect Dmart and they are in this industry from very long time, so there clearly not as easy as we think. Telecom space had many issues & players were struggling with govt. regulation etc. is unlike the retail space. Imagine the Future group - Kishore biyani tried somany things still not able to catch up with Dmart which spent 18 years to be where they are and FRetail is struggling to give away the market share beside this market is very large and has space for all the players.
Thanks,
Kumar
Disc: Invested heavily from the IPO and have biased view
I think this good article from one of the best investorsā¦
Hi
I thought to share a rough cut framework to evaluate retail consumption uptake. I was unsure in which thread to put this but I thought of putting it here as it is the most active thread on the topic.
What could be a leading indicator for purchase patterns? If not leading atleast not lagging as much as the quarterly results. In my opinion payment transactions can help us get a good sense of how retail people are consuming.
There are a few publicly available data points which helps us in doing this. When a customer transacts at a physical store there is only cash or card payment method (other forms such as loyalty coupons, pay later etc tie up back to a funding payment transaction most of the times. Also this class of payment methods is minuscule). Cash by some estimates is easily over 90% of the retail payment patterns in India. I happened to be involved in a global consulting study with a marquee consulting firm about remittances and payments in Latin america. Africa and few countries of Asia including India and we estimated 95%+ cash a few years back for India.
There are primarily cash and card methods of payments. Which can be split into:
Cash - Source: Primarily withdrawn from ATM, secondary from cheque withdrawals (which doesnt happen much now for retail payments), third hoarded cash (cannot be estimated - DeMon?)
Cards - Debit Cards used at a) ATMs as in above b) POS terminals which can be offline and online. Credit Cards used at a) ATMs (this happens very very rarely as the sophisticated user knows the consequences here of excessive charges) and most importantly POS usage.
Also for each card (debit or credit) there is a payment network be it MasterCard, Visa, Amex and RuPay. Each of these card networks know exactly which merchant the transaction came from. They know every transaction pattern real time. Infact I have read that MasterCard/Visa sell this transaction pattern data to hedge funds in the US. We cant get any information from any networks except our homegrown RuPay (only at a summary level though).
So from all the data on transaction patterns of cards at POS terminals, ecom websites, ATM withdrawals we can see how people are consuming. Note all this data is primarily published by RBI (DBIE website has this - I had data since 2012 but my laptop which had it has been broken my kid last year!) and NPCI (which has data for Rupay and UPI). RBI gives data with a lag of 60 days approximately. But NPCI gives data with a lag of 30 days. So in both cases we have an edge to know some consumption trends.
So now some data.
Credit Card at POS (point of sale - could be online and offline).
Debit Card at POS
Debit Card ATM Withdrawals
Rupay which is one of the major infact the largest player in netowrk in India on the debit card side has data right till May and we can see some recovery happening now at physical stores. Note ecom has not suffered much.
UPI is now being used for very small ticket sized retail payments and transfers. It has completely recovered now.
My thumb rule is to track Rupay transactions as the best indicator.
Imagine the kind of insights those funds which take data from MasterCard/Visa have. They even have the theoretical possibility to know at which merchant transaction happened. I dont know how true this is in the US though.
I also like to compare YoY for instance Diwali period of say 2019 with that of 2018 etc. That also gives a good pattern.
I hope this is useful.
Thanks & regards
Deepak
ā My heartfelt thanks to Shri Ignatius Noronha, CEO Dmart, for his contribution of Rs 4 crores to CMOMaharashtra relief fund for the stateās battle against COVID.ā
Maybe it was for donation?
Fellow Boarders - Would require your important input regarding Dmart halting their home delivery services across pin-codes. As of now, delivery has been limited to Mumbai [from where it started].
What does this signify?
Today i was ordering grocery i found DMART IS GIVING good discount on product.
I literally compare about 20-30 items in grofers , big basket and Dmart.
% discount
DMART> Grofers> Big Basket