DMart Share Price: Radhakishan Damani-Held Rs 2.39 Lakh Crore Retail Stock To Give 25% Returns AHead

Ace investor Radhakishan Damani whose DMart shares have turned into market leader since listing, witnessed a sea-saw-like performance so far in 2023. The current year up till now has been volatile for Avenue Supermarts which operates DMart stores. Year-to-date, the stock has tumbled nearly 10% on BSE. But with deep correction in a year, DMart shares have now become attractive to buy due to the company retaining its competitive advantages.

Damani publicly holds 14 stocks whose net worth together is over Rs 1.67 lakh crore, as per Trendlyne data. But his largest shareholding, a little over 96% of the total portfolio, is in the grocery store brand DMart he founded in 2002. As of September 29th, DMart has a market value of over Rs 2.39 lakh crore, and Damani's shareholding in the retail chain firm is at a massive Rs 1,60,787 crore as of now.

As of June 30, 2023, Damani holds 437,444,720 equity shares or 67.2% stake in DMart.

Brokerage Prabhudas Lilladher in its latest research note dated September 26, said, "We analyzed price trend of 125 products across D'Mart Ready, Jiomart and Big Basket in key consumer categories of Loose grocery items, dairy, packaged food, beverages, personal care and home care. We observed that out of 125 products that we compared, the price gap between D'Mart Ready & Big Basket increased for 60% of products, while for Jiomart the trend was mixed with 29%/44% of products seeing a gap increase/decrease."

The brokerage highlighted that the gap between D'Mart Ready/Big Basket increased for most products in August 2023 compared to the reduction that was seen in May 2023, while for D'Mart Ready/Jiomart the trend was mixed.

Although e-commerce in Grocery and Food is witnessing a shift towards quick commerce, the brokerage added, "D'Mart continues to remain most competitive in non-quick commerce segment led by 1) an increase in price gap between D'Mart Ready/BB 2) rising consumer activations and advertising by D'Mart Ready and 3) increase in delivery charges/higher cart value for free delivery by other channels."

Prabhudas Lilldaher expects D'Mart Ready to sustain strong growth and competitiveness due to advantages in sourcing and economies of scale.

Hence, it said, "We expect sales of Rs48bn with EBITDA loss of R424 million by FY26. Retain 'Buy' with DCF based TP of Rs4574."

Last week, on Friday, DMart shares closed at Rs 3674.25 apiece, up by 0.15% on BSE.

Taking into consideration the current price level and target price, DMart shares have the potential to rise by nearly 25%.

Mumbai-based Avenue Supermarts owns and operates D-Mart stores. D-Mart is a national supermarket chain that offers customers a range of home and personal products under one roof. The Company offers a wide range of products with a focus on Foods, Non-Foods (FMCG) and General Merchandise and apparel product categories.

As of June 30, 2023, the Company had 327 operating stores with a Retail Business Area of 13.5 million sq. ft across Maharashtra, Gujarat, Daman, Andhra Pradesh, Karnataka, Telangana, Tamil Nadu, Madhya Pradesh, Rajasthan, NCR, Chhattisgarh and Punjab.

During the June 2023 quarter, the company's standalone net profit stood at Rs 695 crore, as against Rs 680 crore in the corresponding quarter of last year. PAT margin stood at 6.0% in Q1FY24 as compared to 6.9% in Q1FY23. Total revenue in this quarter was Rs 11,584 crore, as compared to Rs 9,807 crore in the same period last year. EBITDA meanwhile came in at Rs 1,036 crore, as compared to Rs 1,008 crore in Q1FY23, while EBITDA margin stood at 8.9% in Q1FY24 as compared to 10.3% in Q1FY23.

Disclaimer:

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