Can D-Mart modify its ownership model?

D-Mart bucked trend in India by choosing a cluster approach for densely populated residential areas

Euphoria around the Avenue Supermarts (D-Mart) initial public offering (IPO) of equity that saw 104 times more demand than the shares on offer might have overlooked a critical factor in the company’s growth so far. Namely, the predominant ownership model for its stores.

The company had rapid growth in recent years, with 112 stores as of September 2016, from one in 2002. Though rapid, the net profit grew to Rs 321 crore in 2015-16 from Rs 60 crore in 2011-12, a compounded annual rate of 51.8 per cent. This, however, has been largely dependent on the predominant ownership model it chose.