PL Sector Report: Retail - Sector Update – D’Mart Ready sustains competitive advantage

Prabhudas Lilladher Pvt Ltd

Prabhudas Lilladher Pvt Ltd


  • Retail - Amnish Aggarwal - Head of Research, Prabhudas Lilladher Pvt. Ltd.
  • Sector Update – D’Mart Ready sustains 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 (Nov’23 vs Aug’23) between D’Mart Ready & Big Basket increased for 40% of products, while for Jiomart the trend was mixed with 36%/24% of products seeing gap increase/decrease. D’Mart Ready continues to remain most competitive in online retail led by 1) sustained price gap with BB & 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 Ecom 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 (D’Mart Ready, JIO, Big Basket, Amazon) continue to cater to monthly/bi-weekly grocery requirements. We expect D’Mart Ready to sustain strong growth due to sourcing and scale advantages. We expect D’Mart Ready to report sales of Rs48bn with EBIDTA loss of R424mn by FY26 with full turnaround by FY28. Retain ‘Buy’ on D’Mart with DCF based TP of Rs4724

FMCG products see selective prices & consumer offers - Loose grocery continued to witness price increase from August levels. Packaged food/beverages, saw limited price fluctuations as inflation seems to have peaked out in these categories while HPC saw price increase for 40-45% of product across platform. Select brands in Pulses, Shampoo, Toothpastes and Dairy have seen price increase.

Gap increase for D’Mart Ready/Big basket: Jiomart witnessed mixed trend – Price gap between D’Mart ready/Big basket increased significantly for loose grocery, however Diary/Packaged food saw mixed trend with PCH seeing gap decrease across products in Nov’23 vs Aug’23. For Jiomart, the trend was mixed, with ~30% product matching D’Mart Ready prices.

Loose grocery – D’Mart Ready continues to improve competitiveness

- Loose grocery continues to witness price increase, as D’Mart Ready/Jiomart/Big Basket saw a price increase in 50%/58%/63% of products in Nov’23 vs 59%/46%/63% (our sample) in Aug’23. As 67% of loose grocery items witnessed decrease in MRP vs Aug’23, discounts on MRP went down over past 3 months.

- D’Mart Ready improved price gap across categories vs Big Basket continuing the trend of Aug’23 (In May’23 the trend was opposite). Inflationary pressure is more visible in Big Basket similar to what we saw in Aug’23, Jiomart trend was mixed like that of Aug’23.

- The quantum of price gap increase in D’Mart Ready/Big Basket was higher as compared to Aug’23. D’Mart ready also improved price change gap with Jiomart than in Aug’23.

(Click on the Link for Detailed Report)

PL Research is also available on Thomson Reuters & FactSet.

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