Sharing a consumer insight on Dmart.

I stay in South Bangalore and have always been fascinated by the massive crowds in Dmart stores nearby. My parents prefer Dmart, but I generally prefer to go to the More store – similar distance but much, much less crowded!

In my experience, while on an average, the prices at Dmart are a tad cheaper than More, the difference though wont be more than 3% – 5%. Why then does Dmart do more than 5x the sales per sqft than what More does?

For the longest time, I have connected this user behaviour to 2 possible factors:

1. Better branding/perception that Dmart is the lowest cost provider
2. An average Indian loving a good deal more than anything else

But I myself haven’t been entirely convinced of the above, for 2 reasons:

1. What about the premiumisation theme? Would people not be willing to pay slightly more for a better (read – running around with your cart in More vs. constantly being hit / apologising to my fellow shoppers in Dmart) shopping experience!
2. If pricing was that critical a factor, how would you then justify the massive adoption of quick commerce and food delivery applications?

Then, a couple of days, we had a family friend and his mother visit us for lunch. While discussing they mentioned that they shop for groceries exclusively at Dmart and not at Star (which is just opposite to their home). Intrigued, I asked them to elaborate.
So, while they frequently visit Star for fresh fruits and veggies, their reason for buying all their groceries from Dmart was that they have observed that the rice/pulses/etc. that they buy from Dmart lasts much longer than that from Star, or any other store nearby store.

I am fairly certain that the above are commodity products where sourcing is pretty much the same for all key retailers. What then is the difference? Inventory Turns

This now makes so much more sense:
Lower Prices → Higher footfalls → Faster Replenishment → Fresh Inventory → Higher Footfalls → Lower Prices. A very strong flywheel!

Inventory turns, as it turns out may not be just a critical financial metric, but a very strong customer requirement as well!

Disclosure: I do not own any shares in Dmart / Amazon / Trent

Few Stats:

America Banking penetration: Stands at 92% as of 2022
India Banking penetration expected to reach 50% by 2025

Median P/B of American banks 1.5 to 2
Current KMB P/B ratio: 2.7 (Historical median 4.1)

Banking is a boring business as it should be, the only surprise we get will be on the negative side. Doing the same old boring things day in and day out is what matters here, being conservative is synonym with past KMB

Now the investors has to ask few question to themselves in this counter, Is there a runway for growth ?
Can we trust the competence of the management (ROE Track record)

As to RBI Ban concerns, it is highly unlikely the management will be complacent especially after the PayTM crackdown.

Of all the banking institutions out there, KMB has more intrinsic value compared others due to having various successful subsidiaries, that currently hold enterprise discount.

What should the investors’ expectation be, can the bank grow beyond 15% cagr for next 10 years, the answer seems to be likely yes

is this better than other investment asset class, gold, real estate, silver, equity , debt, etc., , answer seems to again likely yes

Even at this level, even if the P/B derates the investors should still obtain 15-20%cagr over the years to come possibly decades to come.

And that should be enough for most people, having a drawdown or consolidating for 5 years is frustrating for the investors, after all we all are human beings, however, such is the nature of the market, all we can do is asses is there is major structural risk is there to this investment if not, you should hold on to it and pass it on to the next generation.

In my opinion, if that’s worth anything, we are having a bargain here that;s all I can say, just accumulate as much as you want and hold on to it , I think it’s undervalued not because of the historical PB multiple, rather it’s because of the management of the company and it’s runway of growth.
And one should actually talk to your friends and family who work in PSBs now and what’s the current situation at the branch level (regarding growth and NPA). If not now, in the next 2 or 3 quarters when the NPA cycle turns, one should be seeing and start reaping the benefit of staying patient at this counter. (Unpaid Credit card loans are at 1.8 lakh crore as of this moment, how much do you think will other bank’s share vs KMB ? ) also KMB is in/direct play on affluent India

(PS: ITC cagr is 18% over 30 years, yet it consolidated for 8 years, at least it had its own inherent risk such as the cigarette ban)

Boring is good in finance industry, patience and temperament will be rewarded

Kaynes has upgraded business segments of OSAT. Aimtron has only expressed itsaspiration to go in that direction which is multiple years ahead.

Hello @Divyanshu_Taneja ,
Yes I believe I do have answers to your question.
When i started learning about investing I was always having a doubt how I can even understand by just looking at the chart and company name what company actually does ?

I feel following are some of the useful portal you can use.

1. https://www.screener.in/
2. https://in.tradingview.com/
3. The Stock Market Platform to Stay Ahead: Stock Screeners, Stock Analysis, and more.
4. https://chartink.com/
5. Tijori Finance
6. https://www.moneycontrol.com/
7. https://marketsmithindia.com/

We can add n number of portals here .
But you can depends of above all to find relative information.but you should not consider all the information mentioned is correct. You should review using company annual financial statements. SEBI reports submitted by company.

Feel free to add if I missed anything.

Hello @Divyanshu_Taneja ,
Yes I believe I do have answers to your question.
When i started learning about investing I was always having a doubt how I can even understand by just looking at the chart and company name what company actually does ?

I feel following are some of the useful portal you can use.

1. https://www.screener.in/
2. https://in.tradingview.com/
3. The Stock Market Platform to Stay Ahead: Stock Screeners, Stock Analysis, and more.
4. https://chartink.com/
5. Tijori Finance
6. https://www.moneycontrol.com/
7. https://marketsmithindia.com/

We can add n number of portals here .
But you can depends of above all to find relative information.but you should not consider all the information mentioned is correct. You should review using company annual financial statements. SEBI reports submitted by company.

Feel free to add if I missed anything.