D’Mart Earnings surge 106% for Q3, 105% for H1

In what could be a fitting story to narrate the resurgence of consumer spending, D’Mart, India’s most valued Retail company has declared some very fascinating results on Sat. 16 Oct. ‘21 about it’s third quarter performance. Sales for the 3 month period July – September stood at Rs. 7,650 Crore as against Rs. 5,218 crores for the same period in 2020. Sales for H1-FY21-22, that is from Apr. – Sep. ‘21 grew to a whopping Rs. 12,681 Crores (from Rs. 9,051 Crores in FY 20-21). It must be noted that last year, during these two quarters, most big box retailers were forced to be shut down owning to continued followed by intermittent lockdowns across the country against the backdrop of the Corona pandemic. While the neighbourhood kiranas benefitted immensely due to this, large format retail stores staged a strong comeback since Dec. ‘20 though it was short lived until the second wave stuck the country by Mar. ‘21. Thankfully, the revival this year was faster which shows in D’Mart’s results.

What’s quite surprising is the EBIDTA and PAT growing YoY and that too by a whopping 100%. Earnings before Interest, Tax, Depriciation & Ammortisation for the second quarter in FY 21-22 grew 106.3% from Rs. 325 Crores to Rs. 670 Crores. For the Half year, EBIDTA for the same quarter grew 105% from Rs. 434 Crores in FY 20-21 to Rs. 891 Crores now. Interestingly, PAT, that is the Net Profit also grew to 5.8% in the second quarter FY 21-22 from 4% in the previous year and from 2.8% in H1 FY 20-21 to 4.4% in FY 21-22. This is no mean achievement, given that there is a margin squeeze across the entire supply chain, from the Manufacturer to the Trader all the way offering customers the lowest price possible across product categories in FMCG and household items. With 246 stores in it’s network, and with an estimated USD 3 Billion pa in turnover, D’Mart seem to have found it’s way to extract the best margins from brands and manufacturers while also ensuring attractive prices for customers, which pushes repeat visits and purchases, month after month, in a market that is extremely fragmented and competitive.

Commenting on the performance of the company Mr. Neville Noronha, CEO & Managing Director, Avenue Supermarts Limited, said “Covid-19 related lockdown restrictions were eased further during this quarter. Revenue in the DMart stores grew by 46.6% over the corresponding quarter of last year. Two years and older DMart stores grew by 23.7% in the month of September 2021 as compared to September 2020. We have 187 stores that are 2 years or older. We have done a soft launch of DMart Ready in the cities of Surat and Vadodara. All our premises continue to follow all Covid-19 related protocols for the safety of our customers and employees. More than 96% of all our eligible employees have taken their second dose of vaccination. We continue to encourage all eligible employees to get fully vaccinated”.

The company faces stiff competition from Reliance Fresh, the flagship format of Reliance Retail which is estimated to cross Rs. 30,000 Crores in turnover this Financial Year. While Reliance’s JioMart e-commerce platform is gaining significance, D’Mart continues to draw customers to its physical stores, although the company launched its mobile app 4 years back in markets it operated. Both Reliance Fresh and D’Mart face competition from online behemoths Amazon Pantry and Fresh as well as Flipkart Grocery. On the other hand, the likes of Swiggy (through it’s Instamart) and Dunzo (the runner app which connects local shops to customers). On top of this sits the millions of neighbourhood grocery retail shops, the Kirana Stores, who are physically and business-wise closer to customers. While one could say that the Indian retail Industry is estimated at USD 850 Bn pa, the neck to neck competition among the retailers is only getting intense, especially in the organised space.