Electronics Mart India IPO: Electronics Mart India's shares were in very high demand during the ongoing share sale via initial public offer (IPO). The issue was subscribed 2.37 times by the end of second day of subscription. Electronics Mart India's shares were in very high demand among the non-institutional investors as the portion reserved for them was subscribed nearly 4 times, portion set aside for qualified institutional buyers (QIBs) was subscribed 0.54 times, and shares reserved for retail investors was subscribed 2.37 times.
Electronics Mart India's share sale via initial public offering (IPO) opened for bidding Tuesday and will close today. Electronics Mart India is planning to raise Rs 500 crore from the IPO and it has fixed price band of Rs 56-59 per share. Allotment for Electronics Mart India will be concluded on October 12 and the stock is expected to list on stock exchanges on October 17.
Electronics Mart India IPO: Should You Invest?
Choice Broking has subscribe rating on the stock. The IPO is a combination of fresh issue and OFS portion. Electronics Mart india will not receive any proceeds from the OFS portion. Of the fresh issue net proceeds, Rs 111 crore will be utilized to fund the expansion of retail stores & warehouses; Rs. 220 crore will be used to fund the incremental working capital requirement and another Rs 55 crore will be used for re-paying/pre-paying certain borrowing availed by the company, Choice Broking said.
The organized consumer durable market is growing fast, riding on increasing urbanization, changing consumer preferences, expansion of organized brick and mortar players and deeper internet penetration. The organized market share expanded from around 40 per cent in FY13 to 58-60 per cent in FY20. However, the Covid-19 pandemic has put the brakes on the market expansion in FY21. According to Crisil Research, the share of the organized market in consumer durables retail is likely to expand to 70-75 per cent by FY27, the Mumbai-based brokerage added.
ICICI Direct also has subscribe rating on the IPO. "Given that the company makes upfront payment to suppliers coupled with superior growth prospects, EMIL’s higher working capital requirements (incremental working capital: Rs 590 crore in FY23-24) would restrict FCF generation in the next two years. However, capital infusion worth Rs 500 crore (fresh issue) would assist in financing working capital requirements to the tune of Rs 220 crore and also boost store additions by opening of 60 stores over the next three years (capex: | 111 crore in FY23-25). D/E ratio is also expected to improve from 1.0x to 0.5x by FY23E. EMIL generates steady RoCE of 19 per cent," ICICI Direct said
"At upper price band, EML is valued at 0.6x EV/sales and 22x P/E of FY22. We assign a SUBSCRIBE rating as valuations appear reasonable considering the company’s strong and sustainable growth prospects and continued focus on maintaining balance of revenue growth with consistent margins in line with industry peers," the brokerage added.
Electronics Mart India IPO: Price Band and Lot Size
The company has fixed price band of Rs 56-59 per share in the IPO and retail investor can bid for minimum one lot of 254 shares up to maximum on 13 lots. At the upper end of the price band one lot of Electronics Mart India shares will cost Rs 14,986.
Electronics Mart India IPO Issue Size
The company is planning to raise Rs 500 crore through the IPO and 50 per cent of the issue is reserved for qualified institutional buyers (QIBs), 35 per cent of shares in the IPO are reserved for retail individual investors and 15 per cent are set aside for non-institutional investors.
The company will utilise the proceeds from the IPO for funding capital expenditure for expansion and opening of stores and warehouses, funding incremental working capital requirements, repayment andp prepayment, in full or part, of all or certain borrowings availed by the company and for general corporate purposes.
Electronics Mart India Limited is the 4th largest consumer durable and electronics retailer in India. The company offers a diversified range of products with a focus on large appliances (air conditioners, televisions, washing machines and refrigerators), mobiles and small appliances, IT and others. The company's offering includes more than 6,000 SKUs (stock keeping units) across product categories from more than 70 consumer durable and electronic brands.
Electronics Mart India IPO lead Managers and Registrar
Anand Rathi Securities, IIFL Securities and JM Financial Consultants are the book running lead managers for the Electronics Mart India IPO while KFin Technologies is the registrar for the issue.
