Retail Sector Check - DMart Ready Sustains Competitive Advantage: Prabhudas Lilladher

Prabhudas Lilladher Report

We analysed price trend of 125 products across 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 (Nov-23 versus Aug-23) between DMart Ready and Big Basket increased for 40% of products, while for Jiomart the trend was mixed with 36%/24% of products seeing gap increase/decrease.

DMart Ready continues to remain most competitive in online retail led by-

1. sustained price gap with BB and Jiomart,

2. rising consumer activations and advertising and

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

We note that e-commerce in grocery and food is witnessing accelerated growth due to rising acceptance of quick commerce. However, quick commerce is gaining ground at the expense of Mom and Pop stores while formats like Hypermarts and online platforms (DMart Ready, Jio, Big Basket, Amazon) continue to cater to monthly/bi-weekly grocery requirements.

We expect DMart Ready to sustain strong growth due to sourcing and scale advantages. We expect DMart Ready to report sales of Rs 48 billion with Ebitda loss of Rs 24 million by FY26 with full turnaround by FY28.

Retain ‘Buy’ on DMart with discounted cash flow based target price of Rs 4724.

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