While the Sep-20 quarter had seen the impact of COVID-19, the Jun-21 quarter had seen the direct impact of COVID 2.0. Sep-21 is the first quarter after Mar-21 when D-Mart operated with major headwinds.
The stock hit a 52-week high at Rs5899.90 on the BSE in the early morning trade. However, the stock was corrected in the late morning trade. The stock is currently trading at Rs5,166 down by Rs163.65 or 3.07% from its previous closing of Rs5,329.65 on the BSE.
For the Sep-21 quarter, net profits were up 110.42% on a yoy basis at Rs417.79cr while on a sequential basis, the profits were up by 338%. Its profits at Rs513cr for the first half was also higher 115% yoy indicating at structural growth in earnings. Net margins at 5.36% were a sharp improvement over 3.74% in Sep-20 and 1.845 in the Jun-21 sequential quarter.
D-Mart works on the EDLC-EDLP model which focuses on everyday low cost and everyday low price. This is managed through procuring goods in bulk at competitive prices and then passing on the benefits to the end customer, via distribution and operating efficiency. The newer stores showed better growth than the stores that are 2 years and older.
Operating profits for the quarter were up 141% at Rs552.57cr on the back of a 106% growth in EBITDA for the quarter on a yoy basis. The operating profits grew by more than 4-fold over the sequential June quarter. The inherently low-cost model and high revenue per store and shelf model followed by D-Mart helped them to grow profits rapidly amidst normalcy.