Cant comment on the stock price. But what i understand about sales and profit:
- They are currently concentrated in West and South India, amd they are next looking to expand in North, especially NCR. That would be a big new market for them, especially if they can also go into UP.
- Pricing- Their pricing of goods is among the best in the industry. I know kirana stores who buy from DMart to resell it at MRP. That should continue going forward
- Ecom business- Their ecom business is loss making, as lines per bill is lower than walk in and DMart wont be getting the slotting fees for this sale. The 49 rupees of delivery charges wont cover the entire delivery charges. Hence, the ecom business will be a drag on profitability in the short term.
- Margins: Typically margins for FMCG is lowe than general merchandise. With lowering of inflation, general merchandise sales should pick up and that will give an uptick to margins.
- Informal economy to formal economy- Currently 8% of retail in India is formal. If that is to reach US /China levels (~30%), that would be a huge tailwind to this sector and DMart being one of the leaders, would benefit.
Disc: Invested
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