In the first half of FY24, DMart saw the declining share of the general merchandise and apparel segment, which is hurting its gross margin.
Actually, General Merchandise and apparel business generates higher margins for DMart than its food and non-food FMCG businesses. But, they are continuing to underperform.
I believe that this problem will take some time to resolve. Therefore, the upside in the share price might be limited.
Let’s see the numbers now, in the first half of FY24, the general merchandise and apparel segment’s revenue share fell to 23.2 per cent from 24.75 per cent of last year. EBITDA margin fell 90 basis points in the same period.
General merchandise include plastic, steel goods and appliances items used in the household. DMart has been also successful in the affordable readymade clothing business.
I think these categories will see abundant buying in the festive season in the December quarter.
I think affordable clothing for the young generation is a huge market.
Players like Trent has made big success in the value-for-money clothing segment with its brand Zudio.
Zudio increased its number of stores from 233 in FY22 to 352 in FY23.
Indian market is different, you know. They choose value for money products. It was wrong notion in people that Indians buy cheaper goods, that is not the fact. Zudio is the example.
DMart can make it huge in the apparel segment. They are already attracting different kinds of buyers. We have to see how the general merchandise and apparel segment of DMart will react in the future. But, I have great faith in the consumption power of middle class Indians.
Avenue Supermarkets Ltd. closed at 3,795.95 which 1.22 per cent down from the yesterday’s close.
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