I live in small town in Haryana. Here, Reliance has opened one big Reliance Smart store and 6 small Reliance smart Points store. Apart from one big Reliance smart store, all six store remains empty most of the time. In addition to these stores, Jiomart also do delivery in homes. All the above setup seems to be overkill for small town like Sonepat. Reliance is burning cash (received from strategic investors) like start ups. I think Reliance is trying to do everything. On the other hand, Dmart has very efficient, clean, simple and profitable model.
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Indeed. Reliance does so many things, but not every strategy will fail, and even if they are burning cash, retail business will thrive I think. So maybe Reliance will remain second to Dmart, as they have presence all over India. On the other hand, Dmart has a profitable model.
As this is a long journey, there will be a lot of newcomers, some of whom may stay, while others disappear. And if market perceives those who stay will dent Dmartâs business, Dmartâs high valuations will come down.
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Hi couple of things which see in mid and long term
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Reliance took control of good big bazaar store now operating as smart bazaar will give good competition to D mart. Please also note that stock are almost nil in big bazaar post Amazon / reliance conflict
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Price war will continue and will give tough competition. Please also remember with inflation customer tend to move to low price offering, this is also seen pressure on FMCG stock
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D mart still a destination and need to how far they will maintain it.
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Standalone Revenue from operations for the quarter ended (QE) June 30, 2022 stood at INR 9,806.89 crores (95% YoY growth)
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Hi Thanks for update. Total number of stores given are 294. Do you have ready figures of number of stores for its competitiors like Reliance retail etc for comparison?
Reliance retail is not comparable to Dmart on apple to apple basis as it operates in multiple segments like jewellery, electronics etc.
I have made a comparison table.
| Reliance Retail | Dmart | |
|---|---|---|
| 2021-22 | 2021-22 | |
| Sales | 1,99,749 | 30,976 |
| Sales growth | 27% | 28% |
| Profit before Tax & Int | 10,198 | 2,064 |
| Margin | 5% | 7% |
| Profit growth | 28% | 36% |
| ROCE | 12% | 16% |
| Nunber of stores | 12,178 | 284 |
For reference:
https://relianceretail.com/INV_Doc/RRL_Annual_Rpt/RRL_Annual_Report_2020_21.pdf
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Actually, we should not compare Q1 of 2022, to Q1 of 2021. Q1 2021 is effected by covid.
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Reliance has changed its business strategy. It is playing its cards on convenience rather than cost. It is burning cash a lot compared to Dmart. Dmart is playing on price, and now they are adding comfort with e-commerce. Is Dmart eCommerce a success? Is anyone using Dmart app?
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I am using Dmart App. Its convenient and value for time saved. Only thing is , many times some items go out of stocks fastâŚAlso i have checked price difference of buying through App and by actually vising the Dmart store. There is no consistency. Some items on App are cheaper compared to physical store while other items may be costlier compared to physical store. So no consistent price difference between App and Physical store items.
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This month I used it for the first time. I placed an order online. One thing which I donât like is they charge delivery fee (50rs , typical Indian middle class donât like to pay delivery charge.) which is free in other online stores like Big basket , Grofers etc. There are two options , either you pay the delivery charge or collect it from your nearby stores. But yes prices were lower than Big basket and Grofers. Overall I liked it. If they could make delivery charges also free , I think consumers will like it.
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If they could make delivery charges also free , I think consumers will like it.
I believe it is not a problem. Consumers will compare the prices at DMart Ready and other online stores and clearly see price difference. So they can figure out that they get stuff cheaper even after including delivery charge. Theyâre also given an option to pick up at no charge. DMart Ready outlets are coming up all around to make pick up more convenient.
For existing DMart physical store customers who detest spending long hours at the store in the crowd, this is a good value proposition. They will know that paying Rs 50 or 70 is well compensated for the travel expenses, time and effort saved.
Bottom line is that DMartâs core customer is value conscious. It is reasonable to believe that the value conscious customer understands that free delivery of other apps is not really free.
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Excellent number from Dmart
Consolidated results
Total Revenue for the quarter ended June 30, 2022 stood at Rs.10,038 crore, as compared to Rs.5,183 crore in
the same period last year. Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) in Q1FY23
stood at Rs.1,008 crore, as compared to Rs.224 crore in the corresponding quarter of last year. EBITDA margin stood at 10.0 % in Q1FY23 as compared to 4.3% in Q1FY22.
Commenting on the performance of the company Mr. Neville Noronha, CEO & Managing Director, Avenue Supermarts Limited, said:
We ended Q1 FY 2023 with growth across all key financial parameters. There has been a very good recovery of overall sales. However, this quarterâs performance is not comparable to the same period last year due to the second wave of Covid-19 during that time. We cumulatively opened 110 stores over the last 3 financial years which never got an opportunity to operate in normal circumstances over the last 2 years. These are stores that are larger, better designed and have capacity to handle larger scale of revenue. These stores have done extremely well in this quarter. This is also the first full quarter of zero disruption from Covid-19 pandemic. Q1 like Q3 is a good revenue as well as profit enhancing period due to back to school/college season and the onset of the monsoons.
General Merchandise and Apparel categories saw relatively better traction than the previous quarter but still has some overhang of the Covid-19 led disruptions and acute inflationary impact. Our discretionary contribution mix of this quarter is yet to reach the pre-pandemic levels but is getting better. High inflation over the last two years hides the possible stress in volume growth for discretionary categories of mass consumption. Value growth through positive volume growth of discretionary products in relatively older stores is the best reflection
of the strength of the DMart business, competitive impact and the local economy. We have made good progress in this area during the quarter. We will need another quarter of uninterrupted operations to understand this better.
By the way if the trend is continued finally Dmart is available at less than 100 PE (FY23)
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BTW, is there any guidance on number of stores that are going to be opened in FY 23, 24?
Indeed superb numbers. Now something to monitor on the margin, will they be able to maintain same percentage. Historical data indicates NP remained between 4 to 5.5.
Yes, They will be able to maintain this margin. It will increase further. Reliance and spencers directly get their products from companies, whereas DMart gets their products from dealers/whole sellers. When DMart becomes significant, it will deal directly with companies, and other retailers will struggle. Hope this helps @Nickunj_Nayak
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Seems this is your first post, could you please share the details regarding Monte-Carlo Simulation, what data points, what is the final conclusion and why only to Dmart?
Asking as a layperson. Thanks
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Appreciate your initiative to share Monte Carlo simulations exercise.
I am curious to know that how much you rely on the outcome of such exercise? What is the confidence level? Is it 90% or 95% or something else? When the assumption is chosen in arbitrary way (here normal distribution for stock value % change?) which is more likely not to be true then any result outcome based on such assumptions may be kind of distractions and unreliable in my humble opinion. Have you done the normality test of the underlying data before doing this exercise?
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Another opinion expressed here:
& mention of F&O event, if it happens.
Wide swing from almost 2500 (as per general consensus from Analyst notes)
to 10K in Nov 2023, as per Monte Carlo Analysis (MCA).
@goldendew can you share any case study where MCA has worked, in context of Indian equity market. Thanks.
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how much you rely on the outcome of such exercise?
I donât rely a lot on this exercise. I tried this approach after seeing some finance people doing this using excel (cumbersome).
Have you done the normality test of the underlying data before doing this exercise ?
Yes, employed this suggested method for best fit detection and it as expected detects a normal distribution.
Not doing any error analysis or evaluation on this. Would love to have someone contribute on git.