DMart owner Radhakrishna Damani loses $5 bn as even essentials become too expensive for Indians
- Heightening prices of food and other essential commodities have risen sharply in the past few months across the country due to supply disruption amid Russia Ukraine war.
- Rising inflation across sectors is now leading to slow consumer demand, which impacts volume growth for retail chains like DMart.
- This has wiped off $5 billion from Damani’s piggy in 2022 so far.
Though his retail chain DMart is known for the competitive prices of essentials and food items, falling consumer sentiment coupled with high inflation is hitting the purchasing power of the common man badly.
Damani is the 77th richest man in the world
Damani, who entered the list of Top 100 richest people club last year, is now the 77the richest man in the world. Last year, his stock went on an upswing gaining as much as 70%. This year however analysts have become wary due to expensive valuations and fear that its new store openings might dilute margins.
There is also worry that retail in general could be affected by possible disruptions due to modern players. Added to that, macro and global events are affecting its earnings. Its revenue fell nearly 5% sequentially in the Jan-Mar quarter.
The company attributed this to the Omicron wave. “January 2022 started extremely well but then the Omicron wave of Covid‐19 reduced the momentum over the middle of the month. These waves typically hurt the high margin and discretionary items more,” said Neville Noronha, CEO and managing director at Avenue Supermarts.
The stock slipped fast and low by 21% this year — falling much below the Sensex, which slipped by 6%.
|Stock||% change in year-to-date|
The sticker shock effect vs e-commerce play
As FMCG players are increasing prices of food and non-food essentials both due to raw material inflation, sales are slowing down. India’s FMCG sector volume in general declined 4.1% compared to last year due to a decline in consumption across all zones and town classes, reportedly according to a Nielsen IQ’s report.
“With pick‐up in consumer mobility, high product prices impacted demand for FMCG categories resulting in slower volume growth. That said, food and imported inflation (crude and crude palm oil) dampening consumer sentiments,” said a India Consumer report by Centrum Broking.
DMart however said that its FMCG segment is showing signs of recovery due to the value proposition it offers. “In the discretionary non‐FMCG segment, as of now, it is hard to estimate if the relative lower growth is due to a secular change over time due to e-commerce shift or due to inflation or due to significantly higher Covid-related negative economic impact for certain shoppers,” the company said.
$DMART.NSE A major Pattern Break has been seen in Dmart. Here are some ideas on what you should do! -> For Traders - Price has approached the structure of previous wave which is CIP level and now Price has confirmed the rejection by mading the Inside bar pattern and confirmed the sell after breaking the lows of inside Bar. -> For Investors - This is not the Right time for Investors to kick in because Dmart is not the market leader of FMCG sector and you must consider that it may available on more discount. The management of the company is same, the product, the environment is the same & it is the best time to do some SIP out the Stock and hold it for next few years! Here, what you can see is that DMART is Bearish on the medium term trend & not an amazing BUY for Investors as a Great company it may available for Good prices at future then look for attractive buy ! @BIIndia— (@Tradingmonks) June 06, 2022
COVID-19 cases are on a rise in India — Maharashtra and Kerala reporting the highest surge in cases
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