MASSIVE DEMAND IN GREY MARKET
Avenue Supermarts Limited which runs the famous retail chain store D-Mart, is planning to raise around Rs.1,870 crore through its IPO. Much awaited Avenue Supermarts IPO that has caused flutters in the Grey market for over 3 weeks now is all set to open on 8th March 2017. The Dmart owned Avenue Supermarts IPO in country’s retail sector is coming after considerable gap as last retail sector IPO was in 2007 and is prompted by Radhakishan Damani, who is considered an ace investor himself and enjoys a good degree of respect and ave in the investor community.
ISSUE DETAILS
- Issue Open: 08th March, 2017
- Issue Closes: 10th March, 2017
- Issue Type: Book Built Issue IPO
- Issue Size: 6,23,93,631 Equity Shares
- Face Value: Rs 10/ Equity Shares
- Issue Price: Rs.290 Rs.299/ Equity Share
- Valuation: 1870Cr.(Approx.)
- Market Lot:
- Minimum Order Quantity:
- Listing At: BSE, NSE
COMPANY OVERVIEW
Incorporated in 2002, Avenue Supermarts Limited is Mumbai based supermarket chain D-Mart. Company is among the largest and the most profitable F&G retailer in India. Company offer a wide range of products with a focus on the Foods, Non-Foods (FMCG) and General Merchandise & Apparel product categories.
Company has 112 stores located across 41 cities in India. Company operate and manage all its stores. Company also operate distribution centres and packing centres which form the backbone of the supply chain to support its retail store network. Company has 21 distribution centres and six packing centres in Maharashtra, Gujarat, Telangana and Karnataka.
It opened its first store in Mumbai, Maharashtra in 2002. As of September 15, 2016, it has 112 stores with Retail Business Area of 3.40 million sq.ft, located across 41 cities in Maharashtra (58), Gujarat (26), Telangana (13), Karnataka (7), Andhra Pradesh (3), Madhya Pradesh (3), Chhattisgarh (1) and NCR (1). At the end of Fiscals 2014, 2015 and 2016, it had
75, 89 and 110 stores with Retail Business Area of 2.14 million sq. ft., 2.66 million sq. ft. and 3.33 million sq. ft., respectively.Company plans to deepen store network in southern and western India and gradually expand its network in other parts of India pursuant to its cluster-focused expansion strategy. For Fiscal 2016, Maharastra contributed a majority of our Revenue from Sales (62.57%) followed by Gujarat (18.83%), Telangana (10.15%), Karnataka (6.14%) Andhra Pradesh (1.03%), Madhya Pradesh (0.85%) and Chattisgarh (0.43%).
ISSUE OBJECTS
Proceeds of the issue are proposed to be utilised for following objectives:
- Repayment or prepayment of a portion of loans and redemption or earlier redemption of NCDs availed by the Company;
- Construction and purchase of fit outs for new stores;
- General corporate purposes.
Company Promoters
- Radhakishan S. Damani;
- Gopikishan S. Damani;
- Shrikantadevi R. Damani;
- Kirandevi G. Damani;
- Bright Star;
- Royal Palm Trust;
- Bottle Palm Trust;
- Mountain Glory Trust;
- Gulmohar Trust; and
- Karnikar Trust
BUSINESS EXPANSIONS OVER THE YEARS
VALUATIONS
As far as Valuations are concerned the IPO seems to be overvalued with a P/E of 52.72 at the upper price band and 52.72 on standalone basis, on lower price band on consolidated basis P/E stands at 51.05 while on standalone basis 52.64. (Both Diluted as well as on Bsic EPS basis)
RESTATED CONSOLIDATED SUMMARY STATEMENT OF ASSETS AND LIABILITIES
RESTATED CONSOLIDATED SUMMARY INFORMATION OF PROFIT & LOSSES
RESTATED STANDALONE SUMMARY INFORMATION OF ASSETS AND LIABILITIES
RESTATED STANDALONE SUMMARY INFORMATION OF PROFIT & LOSSES
RESTATED CASH FLOW STATEMENTS
ANALYSIS & SUBSCRIPTION SUGGESTIONS BY AUTHOR
Well Valuations not much of interesting factor in it,as its overvalued but when we compare to its other listed peers that seems interesting for the IPO as it is available at highly discounted Valuations in comparison to its already listed peers, that makes it cheapest among its peers.
Going through its financials one thing halted me was consistent increase in its debt and reason for its issue which states as ” Repayment of NCDs” that seems alarming but the positive thing which caught my eye was it has increase in 27.28% debt in FY 2015-16 in comparison to subsequent FY 2014-15 but its Net Profit grown @ at attractive rate of 51.72%. Not only this it has a consistent increase in RoNW over the years as well as EPS.
Company also has approx. 9% market share, also has retail chains over the country.
So, although it seems overvalued but the positive things that catches my eyes more is its GMP so one can subscribe for the listing benefit although it seems it will correct but after that we may invest for long term benefits