Avenue Supermarts Limited DMart Launch Rs 1,870 Crore IPO
Avenue Supermarts Limited DMart is an emerging national supermarket chain, with a focus on value-retailing. According to Technopak, in Fiscal 2016 the Company was one of the largest and the most profitable F&G retailer in India. It also offers a wide range of products with a focus on the Foods, Non-Foods (FMCG) and General Merchandise & Apparel product categories.
| Objects of the issue
|1) Repayment or prepayment of a portion of loans and redemption or earlier redemption ofNCDs availed by the Company; and
2) Construction and purchase of fit outs for new stores.
Rs. 10Per Equity Share
Rs. 295- 299Per Share
Mar08, 2017 – Mar10, 2017
50% of Net Issue Offer
15% of Net Issue Offer
|Retail||35% of Net Issue Offer|
- Value retailing to a well defined target consumer base.
- Steady footprint expansion using a distinct store acquisition strategy and ownership model.
- High operating efficiency and lean cost structures through stringent inventory management using IT systems.
- Strong track record of growth and profitability.
- The company has generated total revenue of Rs.8606.10 crore for year March 2016 vs Rs 6457.68 crore in year March 2015 on consolidated basis.Revenue for the nine month ended December 2016 was Rs 8803.22 cr.
- D Mart has recorded profit of Rs 318.75 cr in FY16 vs Rs 211.67 Cr in FY15. The profit for Nine months ended December 2016 was Rs 387.47 cr. on consolidated basis.
- Their inability to maintain an optimal level of inventory in their stores may impact operations adversely.
- Their ability to attract customers is dependent on the location of their stores and any adverse development impairing the success and viability of stores could adversely affect D Mart’s business, financial condition and results of operations.
Source: DHRP, EWAL Research
Avenue Supermarts Limited DMart is an emerging national supermarket chain, with a focus on value-retailing.As of January 31, 2017, they had 118 stores with Retail BusinessArea of 3.59 million sq.ft, located across 45 cities in Maharashtra (59), Gujarat (27), Telangana (13), Karnataka (7), AndhraPradesh (4), Madhya Pradesh (3), Chhattisgarh (1), NCR (1), Daman (1) and Rajasthan (2).
For Fiscal 2016, Maharashtra contributed a majority of their 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 Chhattisgarh (0.43%). For nine months period ended December 31, 2016, Maharashtra contributed a majority of their Revenue from Sales (58.84%) followed by Gujarat (18.08%), Telangana (11.45%), Karnataka (7.01%) Andhra Pradesh (2.52%), Madhya Pradesh (1.35%), Chhattisgarh (0.50%), NCR (0.12%), Daman (0.09%) and Rajasthan (0.05%).
Company’s total revenue grew at a CAGR of 35.28% from ₹4702.32Cr in Fiscal 2014 to ₹8606.10Cr in Fiscal 2016. For the nine months period ended December 31, 2016, their total revenue was ₹8803.22Cr. Their net profit after tax, grew at a CAGR of 40.55% from ₹161.37Crin Fiscal 2014 to ₹318.75Cr in Fiscal 2016. For the nine months period ended December 31, 2016, their net profit after tax, as restated was₹387.47Cr.
The company has reported EPS of Rs 5.68 in FY16 and is expected to report earnings of Rs 8.6 FY17E. At the asking price the PE works out to be 34 times.
As the company is available at discount to the industry, we recommend to subscribe the issue for medium to long term of investment purpose.
DISCLOSURE IN PURSUANCE OF SECTION 19 OF SEBI (RA) REGULATION 2014
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