Ignatius Navil Noronha, the chief executive officer of Avenue Supermarts Ltd, which runs DMart retail stores, has seen his wealth surge to more than a billion dollars as the shares of the retail firm jumped an astonishing 113% this year.
The stock hit a fresh record high of ₹5,899 on BSE and gained as much as 10.7% in intraday with its market cap surging past ₹3.54 trillion. At 10 am, the scrip was up 2% to ₹5,431 a share. The stock trading higher for seven consecutive sessions and advanced nearly 40% in this period.
With this, Noronha, aged 47, has become India’s richest professional manager with his net worth surging past ₹7,744 crore. Currently, Noronha has 13.13 million shares, or 2.03% stake, in the company.
Naronha achieved this wealth thanks to the 19-fold rise in the share price of Avenue Supermarts. The stock was listed on 21 March 2017 with an issue price of ₹299 a share. Since then, the scrip surged over 1,800% from its issue price.
Born and raised in Mumbai, Noronha completed his management degree from the Narsee Monjee Institute of Management Studies.
Before joining Dmart, Noronha was working with fast-moving consumer goods giant Hindustan Unilever. Avenue Supermarts founder Radhakishnan Damani hired him in 2004 as a head of business. He took over as a CEO in 2007.
DMart continues to offer the highest discount across most categories, in turn gaining loyalty, a key factor for driving footfall. The firm targets lower-middle, middle, and aspiring upper-middle-income consumers for whom value for money plays an important role.
The firm faces the risk of greater competition from JioMart, Flipkart and Amazon, but analysts believe the firm is well placed in the domestic retail industry given its strong execution capabilities, disciplined low prices and low costs strategy, lower cost of operation, and a streamlined distribution network, which help DMart to penetrate new markets.
Analysts expect a healthy recovery for retail firms driven by progressive lifting of lockdown restriction following the adverse second covid wave, aggressive vaccination drive across the country, longer store operating timings, phased reopening of modern trade and festive season-led buying, which are leading to higher footfall.
On Saturday, the firm reported earnings that were better than expected. Revenues grew by 46.6% year-on-year. Gross margins expanded by 25 basis points y-o-y to 14.3%. Ebitda grew by 106.3% to ₹670 crore. Margins expanded by 260bps to 8.8% aided by lower other expenses (230bps). PAT grew by 113.2%.
After extensively covering MMR and foraying into Ahmedabad, Pune, Bengaluru, and Hyderabad, DMart ready has done a soft launch in the cities of Surat and Vadodara. DMart Ready has extended its offering from food and grocery to General merchandise and even fresh fruits and vegetables.
The company added eight new stores in the second quarter, taking the total store count to 246 at the end of September 2021.
“We expect strong momentum to continue in the third quarter led by gains from higher footfall given reduction in covid restrictions, rising consumer confidence due to vaccinations, higher value sales due to inflation in FMCG and general merchandise, upcoming festival season and more locations and product offerings in DMart Ready,” said Prabhudas Lilladher in a note to its investors.
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