DMart Ready Retains Competitive Advantage, Says Prabhudas Lilladher

Prabhudas Lilladher Report

We analysed price trend of 125 products across Avenue Supermarts Ltd.'s DMart Ready, Jiomart and Big Basket in key consumer categories of loose grocery items, dairy, packaged food, beverages, personal care and home care.

We observed that out of 125 products that we compared, the price gap between DMart Ready and Big Basket increased for 60% of products, while for Jiomart the trend was mixed with 29%/44% of products seeing gap increase/decrease.

Gap between DMart Ready/Big Basket increased for most products in August 2023 versus reduction we saw in May 2023, while for DMart Ready/Jiomart the trend was mixed.

Although e-commerce in grocery and food is witnessing a shift towards quick commerce, DMart continues to remain most competitive in non-quick commerce segment led by-

1. increase in price gap between DMart Ready/Big Basket,

2. rising consumer activations and advertising by DMart Ready and

3. increase in delivery charges/higher cart value for free delivery by other channels.

We expect DMart Ready to sustain strong growth and competitiveness due to advantages in sourcing and economies of scale.

We expect sales of Rs 48 billion with Ebitda loss of Rs 24 million by FY26. Retain ‘Buy’ with discounted cash flow based target price of Rs 4574.

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