Electronics Mart IPO Review: Elara Securities said Electronics Mart India may continue to grow at a healthy pace in terms of store expansion, especially in North India.
The Rs.500 crore IPO of Electronics Mart India opened for subscription on Tuesday (4-10-2022). The Hyderabad-based consumer durables retailer is offering a price band of shares in the range of 56 to 59.
Electronics Mart IPO Review: Should you subscribe to Electronics Mart IPO?
While high competition from online retailers, high geographic concentration and dependence on a limited number of brands are seen as key risks, the fourth largest durables retailer has performed well so far, said analysts who find the asking valuations attractive.
Electronics Mart India IPO Details
|IPO Open Date||Oct 4, 2022|
|IPO Close Close||Oct 7, 2022|
|IPO Price Band||₹56 – ₹59|
|IPO Size||₹500.00 Cr|
|Listing At||BSE, NSE|
|IPO Lot Size||254|
Electronics Mart Grey Market Premium is Rs.30.
Growth Aspects Of Electronics Mart Company
Elara Securities said Electronics Mart India may continue to grow in terms of store expansion, especially in North India, and given the customer shift toward modern format large retailers like Croma.
It noted that the company’s FY22 return on equity and return on capital employed stood at 18% and 14%, respectively.
Based on conservative estimates, Choice Broking said it is forecasting a topline to grow 16.3 per cent compounded annually over FY22-24 to Rs 5,887.40 crore in FY24.
“This growth would be mainly on the back of 11 per cent and 3.8 per cent CAGR rise in a number of operational stores and sales per store, respectively. Ebitda and PAT margins are anticipated at 6.6 per cent and 2.3 per cent, respectively, in FY24E. RoIC and RoE are projected to expand 56bps and 82bps, respectively, over the period,” the brokerage said while suggesting a subscribe on the issue.
Post the IPO, the promoter stake will be reduced to 77.1% at the lower price band and 78% at the upper price.
At the upper price band, the company would command a market cap of Rs 2,270 crore.
Financials of Electronics Mart
The financials are good. Electronics Mart India has recorded a revenue CAGR of 26% over FY15-20 (pre-Covid) and CAGR of 18 per cent over FY16-21.
For FY22, the consumer durables retailer reported a 75 per cent growth adjusted PAT at Rs 104 crore on a 36 per cent rise in net revenues at Rs 4,349 crore, thanks to a low base.
Electronics Mart enjoys favourable terms of pricing and margins from brands due to its scale, said Nirmal Bang Securities, adding that the company has demonstrated superior performance among all major consumer durable and electronics retailers.
“We believe Electronics Mart IPO is being offered at attractive valuations of 21.8 times FY22 EPS and 9.7 times FY22 EV/Ebitda. We recommend subscribing to the issue,” Nirmal Bang said.
Electronics Mart IPO GMP (Grey Market Price)
The current Grey Market Price of Electronics Mart is Rs. 30 (Almost 50% of the price band).
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