After having jumped 13% in the previous three trading sessions, share price of DMart has caved in, falling 5% on Monday to hit the lower circuit.
After having jumped 13% in the previous three trading sessions, share price of DMart has caved in, falling 5% on Monday to hit the lower circuit. The sudden fall in the stock price is aided by the company’s recent disclosure that only half of its stores are operational owing to the nation-wide lockdown. The company’s commentary on the footfall in the stores that are open did not impress investors as well. After falling 5% the stock was down by Rs 120 to trade at Rs 2287 per share on the BSE. DMart has been one of the star-performers on Dalal Street, gaining 64% in value in the last one year.
Avenue Supermarts, the parent company that operates the department store chain DMart told the bourses in a filing that nearly 50% of DMart stores remain closed for operations based on directive by the authorities. “Footfall at stores that are open, depends on movement and timing restrictions enforced by the local authorities. Overall, they are significantly lower than usual footfalls,” the company said. Stores across the country have been selling grocery and FMCG products only, shutting down the sale of non-essential items.
The stock exchanges were informed that DMart is undertaking sales through E-commerce, home delivery and bulk delivery to large housing complexes. However, the company said that sales through these channels are “inconsequential”. DMart also said that sales channels like bulk delivery and E-commerce have been purely initiated to tackle the current situation, hinting that this is not something that the company wishes to venture into.
Lockdown might have affected business operations for a while but according to a recent Bloomberg report the wealth of Avenue Supermarts promoter, Radhakishan Damani has jumped 11%, thanks to the rapid hoarding of groceries and FMCG products. DMart’s competitor, Future Group, that runs the Biz Bazaar hyper stores across the country has seen a slump like never before during the lockdown. As debt mounted for Future Group promoter, Kishore Biyani investors have pushed the shares down close to 80%.
Benchmark indices S&P BSE Sensex and NSE Nifty-50, after opening down and extending the losses have turned flat. While the 50-stock Nifty has reclaimed the 9,000 mark, S&P BSE Sensex is inching closer to the 31,000 level.