PL Sector Update - Retail - - D'Mart Ready retains competitive advantage

Retail – Amnish Aggarwal – Head of Research, Prabhudas Lilladher Pvt Ltd

Sector Update – D’Mart Ready retains competitive advantage

We analyzed price trend of 125 products across D’Mart 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 D’Mart Ready & 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 D’Mart Ready/Big Basket increased for most products in Aug’23 vs reduction we saw in May’23, while for D’Mart Ready/Jiomart the trend was mixed. Although Ecom in Grocery and Food is witnessing a shift towards quick commerce, D’Mart continues to remain most competitive in non-quick commerce segment led by 1) increase in price gap between D’Mart Ready/BB 2) rising consumer activations and advertising by D’Mart Ready and 3) increase in delivery charges/higher cart value for free delivery by other channels. We expect D’Mart Ready to sustain strong growth and competitiveness due to advantages in sourcing and economies of scale. We expect sales of Rs48bn with EBIDTA loss of R424mn by FY26. Retain ‘Buy’ with DCF based TP of Rs4574.

FMCG products see selective prices & consumer offers - Loose grocery continued to witness price increase led by increased MRP in Aug’23 vs May’23 due to rising inflation. Packaged food/beverages/HPC, on the other hand, saw no major price fluctuations as inflation seems to have peaked out in these categories.

Gap increase for D’Mart Ready/Big basket: Jiomart witnessed mixed trend – Price gap between D’Mart ready/Big basket increased significantly for most products (like loose grocery, Dairy and HPC) in Aug’23 vs May’23. For Jiomart, the trend was mixed as only 29% products saw increase in gap, while most product matched D’mart Ready prices.