D-mart cheers...!!!

D-mart cheers...!!! 🍻 

Some people who were comparing  D-Mart IPO with R-power IPO are mostly likely to have acquired powers to get invisible for today. 

😂 Jokes apart...!!!

A fantastic listing for Avenues super market ( D- mart) ...!!!   

Everyone who applied for the IPO and got allotment is feeling as lucky as having won a lottery. I am happy that retailers made money. 

What's mind-blowing is that even after majority of investors who cashed out seeing a listing at 100%+ PREMIUM. The stock price still closed 641...,  which means the institution and strong hands interest in the stock absorbed all the selling and still there was demand for the stock. There have been massive amount of deals from open market today. 

Just to understand it from valuations context the 18000 cr issue which was being offered at the IPO price of 300/ per share was 40 times of FY-18 earnings. That means at close today it trades at more than 40, 000 cr valuations and PE of approx 85 times. Whopping...!!! 

So what's the hype all about ??  why there's a goldrush to lap up the stock even at such high valuations?  

Let's Try & Understand 

> D-MART started its business only in the year 2000.... In just 16 years of existence it's doing a revenue of approx 12000 cr with PAT of 450 cr ( Fy-17) 

> Its now in the TOP 3 largest retail branded outlets in India. 

> Amazing business model :- 

> Majority of the properties where Dmart runs it's company owned 

> Since it saves on RENTALS,  it offers 6-7% discount on its groceries and food items. This is the reason why people prefer going to D-mart instead of any other retailers. 

> That means it saves a massive overhead of RENTALS on the store. 

> The other retailers like reliance,  future group etc,  have their outlets at malls at prime locations which involves higher rentals and common maintainence cost. 

> D-mart  refrains from opening stores in malls instead prefers areas which are on outskirts or away from society so that overall cost is low. 

> They don't over spend on interiors to make a jazzy look. 

> Property appreciation creates value over longer term 

> Last 4 years company revenues has grown at 40% CAGR & profits by 52% annually.  The return on Equity  & return on capital employed have been 24% each. Debt to Equity stands at healthy 0.7%. 

> Its Sales per store is highest and stands at approximately 45-50 cr ( Reliance is 5-7 cr) 

> The D- mart stores have lowest inventory turnaround time which means it's sells very fast and that adds on to operational efficiency and cost benefit. 

> D- mart pays off its suppliers within 2 days and takes a cash discount for fast payments. Which allows it an overall additional 2-3% margins at operating levels. 

> Other retailers generally have 30-60 credit period from their suppliers. 

> D- mart saves by keeping advertising budget very low. 

> Understanding the mindset of Indian consumers. 

🤔  Imagine with massive store expansion and goodwill behind the brand in years to come what if D-mart decides to introduce it's own products and rolls it out at the eye line levels on its own chain of stores???  Sugar Salt???  

Just a food for thought... 

All & All in the world where the world is giving crazy valuations to loss making online ( in the air) business models.  Its heartening to see valuations premium for something which has more substance to it.

WHAT EVER YOU EARN FROM MY CALLS PLEASE GIVE 10% PROFIT'S FOOD TO COWS AND DOGS HELP THM GOD WILL HELP YOU-!!!