Asian Paints and Dmart both have enjoyed robust business models and strong moats to their business. That was the reason these companies enjoyed premium valuations.
Asian Paints in particular started having the first hints of competition from deep pocketed guys in form of JSW and Birla. The addressable market seems to be growing at a slower rate as compared to the competition induced market share loss for Asian Paints. Or atleast that is the perception of the markets. Hence it is one stock that is undergoing serious de rating.
Dmart also enjoyed crazy valuations and of late these valuations have been coming off. And inspite of this kind of cut in valuations, it continues to trade at very expensive valuations as commpared to the growth numbers it is reporting.
If I compare competition to Asian Paints and Dmart, I think Dmart is better placed in the physical store retailing. There is always a fear that online retailing will at some point of time hurt Dmart business model, but we need to see how that plays out.
Personally I think with the kind of headwinds these businesses are experiencing, we need to see how far this derating continues. As with all things in the markets, when the pendulum swings, it does not stop at midpoint, which is the equilibrium level. The ride from optimism to pessimism is very painful for those holding the stock.
With the current ongoing correction, I think with some decent homework, there are a lot of better alternatives to make good money. But this is my personal view and I could be wrong.
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