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DMart has recently released its quarterly results report. In this video, I’ve done a DMart quarterly results analysis. DMart quarterly results can teach us a lot about business and what is driving the recent growth at DMart. From this video, I hope you can understand the business model of Dmart and how to think structurally if you’re about to understand a business, answer an interview question, or make a decision about purchasing a stock or not.
DMart latest news is about their recently announced quarterly results which show increased profits and revenue for DMart. DMart’s quarter-over-quarter revenues have increased by 24.5% and their profits have increased by 8-10% The PE ratio is close to what it was in March 2020. Which is close to the peak during the start of the covid period. These three metrics are favorable for D mart. DMart has achieved revenue and profit growth while its PE is also looking very cheap. To understand the reasons behind this, we need to analyze D’Mart’s business strategy.
If we look at the D’Mart Business Model, there are 3 things we need to consider. These are cost synergies, distribution synergies, and rental efficiency. D mart is a 300-store plus network. When DMart buys something from its supplier, they purchase for all the 300+ stores. This gives D’Mart the leverage to negotiate for higher discounts. This helps D’Mart pass on these discounts to the end consumer.
Also, if you look at where DMart opens its stores, you’ll find that the majority of them are in the suburbs. In tier 2 tier 3 towns. This ensures that the access of these stores to the highways is better and trucks can get to these stores easily. The distribution network for DMart is very efficient and it is planned in a great way.
For any other store, the rental spend is close to 5-6% of their total revenues. However, for DMart it is 0. Because DMart is not going and leasing properties to open stores, it is actually purchasing the land. So, it’s not a supermarket store, it is actually a real estate business. Real estate prices don’t usually don’t go down because there is a limited amount of land. This ensures that DMart incurs minimal cost and the end consumer gets the benefit of it.
Growth drivers for DMart include the prediction that from the current size of 300 stores, DMart may grow to 1500+ stores in the next 10-20 years. This will bring huge cost efficiency based on a 1500+ store network. Revenue growth and also the cost saving from the 1500+ store will be huge. In tier 2 or tier 3 towns, DMart is actually selling to the middle-class people living in these tier 2 tier 3 cities. The majority of DMart’s base is in tier 2 tier 3 towns. This makes the customer acquisition strategy of DMart almost perfect with a huge potential for growth in the future.
At the end of the video, I talked about external factors such as inflation and how spending is down as well. This is why the recent quarterly results were not up to expectations. DMart is well better placed than many other competitors in the given scenario. Hope this video helped you understand how to structure your answers in an interview and which aspects to consider while framing your answer. Hope you found this video helpful, kindly share your feedback and questions in the comments.
About Me
I publish meaningful and valuable content on this channel. My aim is to make business news more accessible and easy to grasp. If you find my videos informative and insightful then make sure to subscribe and leave a comment. I’ll see you in the next video
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0:00 - Intro
0:47 - DMart business model
1:03 - DMart Financials
2:00 - DMart Profitability model
2:24 - Cost Synergies
2:49 - Distribution Synergies
3:27 - Rental Efficiency
4:16 - Growth Drivers
5:41 - External Factors
6:38 - Summary
7:00 - Outro
