Chain set to become highest valued listed retailer

D-Mart, promoted by stock market investor R K Damani, is set to become the highest valued listed retail company in the country.

D-Mart’s parent, Avenue, Supermarts, said it was raising ~1,870 crore through its initial public issue and diluting 10 per cent of it. Going by that, the company is valued at ~18,700 crore.

It has set a price band of ~295-299 a share.

In comparison, Kishore Biyani-promoted Future Retail has market capitalisation of ~12,201 crore, with Wednesday’s closing price of ~258.60, and Tata-owned Trent has a market cap of ~8,148 crore. The valuation of Reliance Retail, largest retailer by sales, is not separately available as it is part of Reliance Industries.

“It is an efficiently-run organisation and has good margins,” said A K Prabhakar, head of research at IDBI Capital.

D-Mart has Ebitda (earnings before interest, tax, depreciation and amortisation) of 8.8 per cent and profit after tax of 4.4 per cent, double that of Future Retail in Ebitda.

“The company’s business model is one of its kind and has also been profitable. The valuations of the company can be justified with the strong financials and consistent track record,” said Deven Choksey, managing director of KR Choksey Investment Managers.

The company opened its first store in Mumbai in 2002. It had 118 stores with business area of 3.59 million sq ft, located across 45 cities in the country, as on January 31.

The 15-year-old retail chain has made profits in the past five years when other illustrious but relatively younger chains, such as Aditya Birla Retail, Tata Tesco-owned Star, Raheja-owned Hypercity, Spencer’s, were yet to make net profit.

The chain, which has only 118 stores, is the third largest chain after Mukesh Ambani’s Reliance Retail and Kishore Biyani’s Future group in terms of revenue.

Its numbers are best in the sector. Its top line has grown compounded annual growth rate (CAGR) of 40.28 per cent from ~2,222.4 crore in FY12 to ~8,606 crore in FY16.

Whereas the largest retailer by revenues, Reliance Retail, grew 29.9 per cent in revenue annually.

The chain had grown its profits at a CAGR of 51.9 per cent from ~60.4 crore in FY12 to ~321 crore in FY16, it said. Reliance does not share details of net profit in retail business.

It has posted growth of 22.5 per cent in FY16, one of the best in the food and grocery retail.