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Retail stock therapy - part 1

A lowdown on how different players in the retail space are faring

Soumik Kar

The churn in the retail sector over the past years has separated the men from the boys. On one end are players such as Avenue Supermarts (D-Mart) and V-Mart, which have delivered over the past five years. And on the other, is Shoppers Stop, which has struggled to hold its ground. Somewhere in the middle are Future Retail, Trent and Aditya Birla Fashion and Retail, who have managed a turnaround but have yet to prove that they have permanently migrated to a stable and sustainable growth trajectory.

The good news is that the policy environment has improved for organised retail over the past one year. The demonetisation exercise benefited the sector in the form of increased customers and the implementation of GST is expected to further boost footfall. The organised players are geared for GST not only in terms of front-end (billing, integration of software, etc) but also back-end ready as they procure directly from companies. The unorganised players, especially wholesalers, are witnessing tough times – demonetisation has derailed their business model and now GST-compliance costs will exert further pressure on non-compliant players. Keeping in view the intensely competitive environment, here’s a look at how the major players are poised.

Avenue Supermarts

The Radhakishan Damani-owned low-cost retailer often gets compared to Walmart and has delivered superlative financial performance so far. It has made truckloads of money not only for the promoter but for all those who subscribed to its IPO. Between FY12-17, its operating income and net profit has compounded at 40% and 52% respectively and the stock price has appreciated 4x from its IPO price of Rs.299.

DMart, Avenue SupermartsAnalysts believe D-Mart has perfected the art of deep discounting, the only metric which appeals to every Indian consumer. Its low pricing strategy has been successful because of its c

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