Latest news with #DMart
Mint
7 hours ago
- Business
- Mint
DMart eyes higher margins via private labels as quick commerce grows
Bengaluru:Avenue Supermarts Ltd, which operates the DMart retail chain, is expanding its private label portfolio beyond food staples and packaged groceries into home and personal care (HPC) categories, as it looks to improve margins amid rising quick commerce competition and sluggish consumer spending. This move mirrors a broader trend in value retail, where private labels are increasingly being used to drive affordability and protect margins. Private labels are in-house brands often sold at lower prices and are owned and sold exclusively by a retailer. 'Fast moving consumer goods (FMCG) companies are expandingtheir product lines and trying new things, like HUL is cutting back on palm oil, and Nestle teaming up with a drug company for a new recipe," said an equity research analyst working in a Mumbai-based brokerage firm who did not want to be named. Dmart's rival Tata Trent Star Bazaar has built a successful private label category which has more than doubled its revenue from ₹1,798 crore in FY23 to ₹2,699 crore in FY25. In categories where private labels are offered, they now contribute over 70% of sales, up from around 60% two years ago. Vishal Mega Mart, which has a strong presence in tier-II and tier-III cities, reported revenue of ₹10,716.3 crore in FY25. While the company does not break out private label contribution in its financials, industry estimates suggest that 65-70% of its sales come from in-house brands across apparel, footwear, and general merchandise. DMart has started expanding its private labels in categories such as detergents, beverages, soaps, and biscuits under various brand names such as 'Star Bright", 'Sparkle", and 'Bisky Bites", which compete with similar product lines from some of the country's largest fast-moving consumer goods (FMCG) players, including Hindustan Unilever (HUL), Nestlé, and ITC. Mails sent to DMart did not elicit a response until press time. 'DMart is attempting to increase its gross margins by adding private labels in more categories (HPC, foods); this may only partly offset QC-induced footfall and cost pressure," according to a Kotak Institutional Equities Report written by Garima Mishra and Ishaini Swain on 23 June. Private labels According to the report, these private labels now occupy 20-30% of shelf space in select product categories at DMart outlets. The retailer previously restricted private labels to its staple product category under the 'Premia" brand, which was started in 2002. According to the report, these private labels are priced about 30-70% lower than some of the branded FMCG products. This underscores the retailer's vision to sell everyday products at 'everyday low prices" to Indian consumers. For example, its private label detergent, Star Bright, costs ₹72 per kg, while P&G's Tide costs ₹125 per kg. Similarly, the retailer's mango juice under the Go Fruit brand sells at ₹34 compared to Parle Agro's Frooti. Founded by billionaire Radhakishan Damani in 2000, DMart opened its first store in Powai, Mumbai, in 2002. Today, it is India's largest retail chain, with a market capitalisation of ₹2.8 trillion. The company went public in 2017 and has built its success by offering consistently low prices. DMart pays wholesalers upfront, often ahead of industry payment cycles and secures deeper discounts, which it passes on to consumers. The company is currently navigating a phase of transition, facing twin challenges: a change in leadership and intensifying competition from quick commerce players. Longtime chief executive officer Neville Noronha, who has been instrumental in building DMart into India's most valuable retail chain, is expected to step down by 2026. He will be succeeded by Anshul Asawa. 'It seems like Asawa might have a significant challenge ahead given the high benchmark that Noronha has set," said the analyst based in Mumbai. The retailer's aggressive push into private labels also coincides with the rapid rise of quick commerce players such as Zomato's Blinkit, Swiggy's Instamart, and Zepto, which have been making inroads in several cities, especially in tier-II and tier-III cities, where DMart has limited presence. According to the Kotak report, there are over 100 cities where one or more quick commerce platforms have a presence, but DMart does not. 'Quick commerce is outpacing DMart Ready, which operates more like traditional e-commerce with one- to two-day delivery. In contrast, quick commerce players deliver within minutes," said the analyst. Increasing coverage DMart currently has stores across 152 cities, while Blinkit operates in 194 cities, followed by Instamart and Zepto that are present across 116 and 73 cities.'In urban and metro markets, quick commerce has high penetration, but DMart is present even in places where Q-commerce hasn't reached, so I think it will be able to keep up with rising competition," said Pratik Prajapati, equity research analyst at Ambit. Despite its value positioning, DMart's profitability has come under strain in recent years. According to the company's FY25 financials, the company's Ebitda margin, a profitability metric that indicates the company's operating performance, declined from 8.5% in FY23 to 7.6%, even as gross margins remained steady at 14.8%. 'The main reason for this drop is due to rising employee costs," said the analyst. The employee cost now accounts for 6% of revenues, up from 5.4% two years ago. 'The private labels tend to be cheaper, and if the consumers are satisfied with the quality of the products, the expansion will deepen further," said the analyst. 'In the long term, this can impact the margins of some of the branded FMCG goods." The private label push is also supported by DMart's ongoing store expansion. DMart added 50 stores in FY25 and plans to open about 75 new stores over the next three years, according to the Kotak report on 23 June 2025. States like Uttar Pradesh and Odisha are expected to be key focus areas. The company recently entered Agra, marking its first expansion into the state beyond Ghaziabad. The company clocked a revenue of ₹59,358 in FY25, a 16.9% increase over the previous fiscal year. The company's net profit jumped 6.7% from ₹2,536 crore in FY24 to ₹2,707 crore in FY25. 'Private labels not only improve margins but also give customers more choice within a price band," said Prajapati. 'If customers are satisfied with the quality, they are likely to stick with the brand over time." 'As they gain acceptance, we're already seeing revenue pressure on traditional FMCG brands. Brand cannibalisation will likely continue as competition intensifies", said the analyst who did not want to be named.
&w=3840&q=100)
Business Standard
a day ago
- Business
- Business Standard
10 large-cap stocks to bet across sectors that may gain up to 32% in H2CY25
Bharti Airtel, DMart, Adani Enterprises, Eternal among 10 large-cap stocks that look technically strong on charts and can deliver double-digit returns in the next six months. Rex Cano Mumbai Listen to This Article Large-cap stocks have outperformed the broader market in the first-half of the calendar year 2025. As we draw curtains to June 2025, the National Stock Exchange (NSE) Nifty 50 index has gained the most, and is up 8.1 per cent, while the large-cap index - the Nifty 100 has gained 6.6 per cent. In comparison, the Nifty MidCap 100 and the Nifty SmallCap 100 are up 3.5 per cent and 0.2 per cent, respectively. Analysts believe that the underperformance of small-and mid-cap stocks in H1 was on account of tepid corporate earnings and uncertain global environment. READ
Mint
3 days ago
- Business
- Mint
DMart share price: Kotak Securities slaps 'sell' tag to THIS Radhakishan Damani portfolio stock
DMart share price in focus: Domestic brokerage firm Kotak Institutional Equities, in its recent note, maintained a cautious stance on DMart, citing rising competition in the quick commerce (QC) space. While the brokerage remains optimistic about DMart's physical store expansion—expecting its store count to grow from 415 currently to 620 by FY28E—it flagged intensifying pressure from QC players, who are rapidly expanding their geographic footprint across India. Kotak believes this could result in heightened price competition, especially as DMart grapples with increasing employee and operating costs. The brokerage has therefore reiterated its 'Sell' rating on the stock, with a target price of ₹ 3,400, implying a downside of 20.35% from the last closing price. DMart recently announced the opening of a new store in Agra, Uttar Pradesh (UP). UP is a large, populous state, and the move potentially signals more store additions in the region. Kotak notes that while D-Mart was already present in Ghaziabad, it had not meaningfully expanded beyond that city until now. The brokerage considers the UP expansion to be in line with expectations, referencing DMart's July 2024 analyst call, where Uttar Pradesh and Orissa were identified as key growth markets. However, QC players have already captured significant ground in these regions. Blinkit now has a presence in 26 cities in UP, while Instamart, Zepto, and BB Now operate in 13, 8, and 9 cities, respectively. QC companies have expanded geographic footprint rapidly Nationally, Blinkit has expanded to 194 cities, Instamart to 116, and Zepto to 73—outpacing DMart, which currently has a presence in 151 cities. The brokerage further highlights that over 100 cities now have at least one QC player but no DMart store—underscoring the aggressive push of QC players into Tier 2 and Tier 3 markets. Additionally, DMart lacks any store presence in 13 Indian states, including Assam, Bihar, and Chandigarh, where Blinkit and Instamart are already operational. In response to competitive pressures, DMart has been increasing its focus on private-label products to protect margins. While it has historically offered private labels in bulk grocery segments such as grains, pulses, and flours, the retailer is now actively expanding into branded categories like biscuits, candies, and home and personal care products (detergents, soaps, hair oils, etc.). Kotak's recent store visits indicate an increasing amount of shelf space devoted to these products, which are significantly cheaper and closely resemble their branded counterparts in packaging and appearance. Most of these products appear similar (in looks, packaging, etc.) to their branded counterpart. The brokerage believes that this is a clear effort by DMart to defend gross margins while delivering better value to customers. However, it also cautioned that the ramp-up in private labels may only partially offset the impact of QC-led footfall erosion and rising cost pressures.
Mint
3 days ago
- Business
- Mint
DMart faces rising QC threat as Kotak reiterates 'Sell' call with 20% downside
DMart share price in focus: Domestic brokerage firm Kotak Institutional Equities, in its recent note, maintained a cautious stance on DMart, citing rising competition in the quick commerce (QC) space. While the brokerage remains optimistic about DMart's physical store expansion—expecting its store count to grow from 415 currently to 620 by FY28E—it flagged intensifying pressure from QC players, who are rapidly expanding their geographic footprint across India. Kotak believes this could result in heightened price competition, especially as DMart grapples with increasing employee and operating costs. The brokerage has therefore reiterated its 'Sell' rating on the stock, with a target price of ₹ 3,400, implying a downside of 20.35% from the last closing price. DMart recently announced the opening of a new store in Agra, Uttar Pradesh (UP). UP is a large, populous state, and the move potentially signals more store additions in the region. Kotak notes that while D-Mart was already present in Ghaziabad, it had not meaningfully expanded beyond that city until now. The brokerage considers the UP expansion to be in line with expectations, referencing DMart's July 2024 analyst call, where Uttar Pradesh and Orissa were identified as key growth markets. However, QC players have already captured significant ground in these regions. Blinkit now has a presence in 26 cities in UP, while Instamart, Zepto, and BB Now operate in 13, 8, and 9 cities, respectively. QC companies have expanded geographic footprint rapidly Nationally, Blinkit has expanded to 194 cities, Instamart to 116, and Zepto to 73—outpacing DMart, which currently has a presence in 151 cities. The brokerage further highlights that over 100 cities now have at least one QC player but no DMart store—underscoring the aggressive push of QC players into Tier 2 and Tier 3 markets. Additionally, DMart lacks any store presence in 13 Indian states, including Assam, Bihar, and Chandigarh, where Blinkit and Instamart are already operational. In response to competitive pressures, DMart has been increasing its focus on private-label products to protect margins. While it has historically offered private labels in bulk grocery segments such as grains, pulses, and flours, the retailer is now actively expanding into branded categories like biscuits, candies, and home and personal care products (detergents, soaps, hair oils, etc.). Kotak's recent store visits indicate an increasing amount of shelf space devoted to these products, which are significantly cheaper and closely resemble their branded counterparts in packaging and appearance. Most of these products appear similar (in looks, packaging, etc.) to their branded counterpart. The brokerage believes that this is a clear effort by DMart to defend gross margins while delivering better value to customers. However, it also cautioned that the ramp-up in private labels may only partially offset the impact of QC-led footfall erosion and rising cost pressures. Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
&w=3840&q=100)
Business Standard
5 days ago
- Business
- Business Standard
This retail-focussed stock can potentially rally up to 31%; say tech charts
Shares of Avenue Supermarts (DMart) have been in focus in recent days, with the stock rising 6 per cent as against a mere 0.1 per cent gain in the NSE benchmark index, the Nifty 50, in the last four trading days. Markets have attributed the recent gains at the counter to the company's opening of its new store in Agra, Uttar Pradesh. Avenue Supermarts in an exchange filing said the total number of DMart stores now stands at 421. Back on the bourses, on Monday, DMart stock traded on a flat note even as the benchmark indices - the Sensex and the Nifty slipped around 1 per cent each amid the Israel-Iran war. However, the stock still trades considerably (27.5 per cent) below its 52-week high of ₹5,485; while up nearly 29 per cent when compared with its 52-week low of ₹3,337. Technically, DMart stock witnessed a breakout on the daily chart on Friday, following a close above its super trend line resistance for the first-time since April 30, 2025. Here's a detailed technical analysis of DMart stock. Avenue Supermarts (DMart) Current Price: ₹4,300 Upside Potential: 31% Support: ₹4,153; ₹4,117; ₹4,044; ₹3,930 Resistance: ₹4,540; ₹4,725; ₹5,100 Technical charts indicate that going ahead, DMart is likely to trade with a favourable bias as long as the stock holds above ₹3,930 levels. Intermediate support for the stock can be anticipated around its 50-Day Moving Average (50-DMA), which stands at ₹4,153 and the 20-DMA at ₹4,117. That apart, the 200-DMA at ₹4,044 is likely to act as a significant support. CLICK HERE FOR THE CHART ALSO READ | PolicyBazaar, DLF, Airtel: Trading strategies for Chris Wood-owned stocks On the upside, the long-term chart shows that DMart share price can potentially soar to ₹5,630 levels - this implies a potential upside target of 31 per cent from present levels. As per the technical charts, DMart could face interim resistance around ₹4,540, ₹4,725 and ₹5,100 levels on its way up. ALSO READ |
