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    Episode 2: DMart

    Mr. Radhakishan Damani is the only Indian billionaire who got Richer this lockdown.  

    He founded DMart almost 18 years back and today the company has taken the market by storm and has left everybody bamboozled on how it managed to profit itself even during given periods of atrocities.

    DMart is an Indian chain of hypermarkets which offers a wide range of basic home and personal products under one roof. It is operated by Avenue Supermarts Limited with 7,713 permanent employees and 33,597 employees hired on a contractual basis as per the reports of March 2019. DMart today has a well-established presence in 214 locations across 11 states and 1 Union Territory such as Maharashtra, Karnataka, Rajasthan, Daman to name a few. 

    DMart is India’s most profitable supermarket chain known for its thrifty cost structure. The efficient cost management allows them to offer their products at a cheaper rate and the inventory moves so fast that the stores place monthly orders for fresh stock, the shortest period among all Indian retailers. The share price of Avenue Supermart gained as much as 66% in 2019-20 making Radhakishan Damani the second richest person in India after Mukesh Ambani with a net worth of 1.2 Lakh crores (15.9 Billion USD) according to Forbes.

    Pre-Lockdown Phase

    DMart deals in products ranging from Fruits, Pulses, Cleaners, Beauty Products, Home appliances, and every other necessary Fast Moving Consumer Goods, a result of which during January-March in 2020, due to panic buying of the same household essentials, the consolidated net profit of the company rose to Rs 271.28 crore, a 41.6% rise as compared to last year where the net profit was Rs 191.57 crore during the same period. The standalone revenue for the March quarter in 2020 grew 23% to 6,194 crores, as compared to ₹5,033 crores during the same period last year.

    During the Lockdown and Ahead

    DMart being one of the big low-cost players helped sustain the April Decline well. The company saw a huge decline of about 45% in its April revenue, as more than 50% of its stores remained closed owing to strict lockdown protocols. 

    Post a few relaxations, DMart saw some improvement during May. Many stores started operating again. Although the footfall remained ever low, some stores which started operating on a 24/7 basis were able to regain their stand. The supply chains have seen further improvement during the same month with the resumed manufacturing of goods placing DMart once again in a profitable position.

    However, the rivals of DMart were not in a productive position. Future Group, which runs India’s second-biggest retail chain by income and has more than 1,300 stores countrywide, saw shares of its publicly-traded retail dive 80% this year in the middle of mounting debt.

    The uncertainty of the future has resulted in a wave of anxiety among the residents. With very little to earn and soaring living costs, the mindset of the consumers has now shifted to that of survival. A small push, whether it be in the form of another lockdown or a sudden increase in the number of COVID-19 cases, is sure to cause panic buying among consumers. Such panic buying will only result in higher profits for DMart.

    Finally, despite the huge impact of COVID-19 on Avenue Supermarts, its stock continues to trade at more than 100 times trailing earnings. The Low-Cost structure inherited by DMart has seen itself rising above its competitors and even now the Investors seem to be attracted to firms that are relatively less impacted.  We can fully expect DMart to continue its rise towards higher earnings at least till the end of 2020.

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