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Company Profile

Avenue Supermarts Limited is an Indian retail corporation that runs a chain of hypermarkets in India, under the DMart brand. Headquartered in Mumbai, it was founded by Radhakishan Damani in 2002, with its first branch in Powai’s Hiranandani Gardens. The company is having approximately 196 stores in 72 cities across 11 states in India. After the initial IPO listing (as Avenue Supermarts Ltd.), it made a record opening in the market on the National Stock Exchange. The company is the 65th most valuable Indian firm, ahead of many more competitors.  

Retail Industry in India

• Indian retail industry has surfaced as one of the most active and fast-paced industries due to the entry of a number of new players. Total spending expenditure has reached nearly US$ 3,600 billion during 2020 from US$ 1,824 billion in 2017 (approximately). 

• Retail industry accounts for over 10% of the country’s gross domestic product and supports around 8% of the employment. India is the world’s fifth-largest international destination in the retail sector. 

• As per Forrester Research India, India’s retail market is likely to reach US$ 1.3 trillion by 2024 (approximately).

• Revenue of India’s offline retailers, also known as brick and mortar retailers, is expected to have increased by US$ 1.39-2.77 billion in FY20 (approximately). 

• India’s e-commerce market is estimated to record sales worth US$ 55 billion during 2021 with the festival period in 2020, sold goods worth US$ 9 billion (approximately) on virtual platforms despite the pandemic attack.

l The Indian retail industry has received Foreign Direct Investment (FDI) equity inflow totalling US$ 3.47 billion (approximately) during April 2000-March 2021, according to Department for Promotion of Industry and Internal

Trade along with various private equity and venture capital funds in 2020.

• Government of India has allowed 100% FDI in online retail of goods and services through the automatic route, with a focus to improve digital communications in Tier 2 and Tier 3 markets of the country.

• Retail and wholesale trade will now get the benefit of priority sector lending under the RBI guidelines.

• E-commerce is possibly creating the major revolution in retail industry, which is likely to carry on in the years to come. Retailers should control digital retail outlet, which would allow them to spend less money on real estate while realization out to more customers in smaller cities.

• By 2024, India’s e-commerce industry is expected to increase by 84%, (approximately) fuelled by mobile shopping. 

Company Perspective and Review

• The stock is trading at a 52 week high with a strong Return on Equity which covers their cost of capital. The beta of the company stock shows high volatility.

• The scrip has been performing well since its Initial Public Offering in the year 2017 without disappointing its investors. The company is debt free and cash rich unlike most of other retails chains.

• Its business model of being the lowest price retailer with a focus on offering a wide range of everyday value quality retail products makes the stock an exceptional performer even during the pandemic challenge.

• Long-term outlook for the industry looks positive, supported by rising income, favourable demographics, entry of foreign players, increasing urbanisation, reopening of the economy and aggressive vaccination drive.

• Good financials and a strong presence in an ever growing industry, makes the stock a good buy.