- Rising prices for food and other basic commodities have risen sharply in recent months across the country due to supply disruptions amid the war between Russia and Ukraine.
- Rising inflation across all sectors is now leading to slower consumer demand, which is impacting volume growth for retail chains like DMart.
- This has wiped out $5 billion from Damani’s piggy bank in 2022 so far.
Retail king Radhakishan Damani lost $5 billion of his personal wealth in 2022, reducing his fortune to $19.3 billion.
Although his DMart retail chain is known for competitively priced daily necessities and groceries, declining consumer sentiment coupled with high inflation is hitting the ordinary man’s purchasing power hard.
Damani is the 77th richest man in the world
Damani, who entered the club’s 100 richest list last year, is now the 77th richest man in the world. Last year, its stock soared as much as 70%. This year, however, analysts have grown wary due to high valuations and fear its new store openings will dilute margins.
There are also concerns that retail in general will be affected by possible disruptions from modern players. Additionally, macroeconomic and global events affect its earnings. Its revenue fell nearly 5% sequentially in the January-March quarter.
The company attributed this to the Omicron wave. “January 2022 started very well, but the Omicron wave of Covid-19 then reduced the momentum in the middle of the month. These waves generally hurt the high margin and discretionary elements more,” said Neville Noronha, CEO and Director General Avenue Supermarts.
The stock has slid fast and low 21% this year, falling well below the Sensex, which slid 6%.
|Store||% change since the beginning of the year|
The sticker shock effect vs the e-commerce game
As FMCG players raise prices for food and non-food staples due to commodity inflation, sales are slowing. The volume of India’s FMCG sector in general was down 4.1% year-on-year due to lower consumption across all areas and city classes, according to a Nielsen IQ report. .
“As consumer mobility resumes, high product prices have impacted demand for FMCG categories, which has slowed volume growth. That said, food and imported (crude and crude palm oil) inflation is dampening consumer sentiment,” said an India Consumer report from Centrum Broking.
DMart, however, said its FMCG segment is showing signs of recovery due to the value proposition it offers. “In the non-FMCG discretionary segment, at present, it is difficult to estimate whether the relatively weaker growth is due to a secular change over time due to the change in e-commerce or inflation or effects negative Covid-related negatives significantly higher economic impact for some buyers,” the company said.
$DMART.NSE A major pattern break has been observed in Dmart. Here are some ideas on what you should do! -> For Traders – Price approached the previous wave pattern which is CIP level and now price confirmed rejection creating the inside bar pattern and confirmed sell after breaking the lows of the inside bar. -> For Investors – This is not the right time for investors to step in as Dmart is not the market leader in the FMCG industry and you should consider that it may be available with more discounts. The management of the business is the same, the product, the environment are the same and now is the best time to SIP on the Stock and keep it for the next few years! Here what you can see is that DMART is bearish on the medium term trend and is not an incredible BUY for investors as a big company it may be available at good prices in the future , then look for an attractive purchase! @BIIndia
— (@Tradingmonks) June 06, 2022
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