DMART Surged by 11.47%

DMART stock price surged by almost 11% after reporting around 17% revenue increase in Q3 It's still trading at an expensive valuation of around 85 PE Even if I calculate forward PE expecting 20% growth in EPS it still comes out to 87 And also that doesn't change the fact that their COCO model is inefficient and involves huge Capex. This model has various challenges like rise in land prices, less flexible to shift operations and most important which is quick commerce. The models at which Blinkit and Instamart work is far more efficient where a Mother Warehouse transfer goods to small warehouses located in high demand areas. Their high margin business of Apparels are also under pressure and their DMART Ready which is the online chain of DMart still contributes very less in their revenue. A fair valuation for it could be around 55-60 PE Though COCO model has its advantages like savings in rental costs and stronger balance sheet due to factors like rise in inflation and land prices but it limits the expansion process which is important for big chains like DMART A mix of COCO and Leasing Model could be much better