Consumer durables and electronics retailer Electronics Mart India listed on the bourses with a massive 52 percent gain on Monday – largely in line with what analysts expected.
The stock opened at Rs 90 on the NSE, against an issue price of Rs 59, and the opening tick on the BSE was Rs 89.40.
The Rs 500-crore public issue had received strong response from investors, subscribing 71.93 times. Qualified institutional investors bought 169.54 times the allotted quota, non-institutional investors 63.59 times the portion set aside for them, and retail investors put in bids 19.71 times the reserved portion.
The price band for the offer was Rs 56-59 per share.
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The funds will be used for expansion and opening of stores and warehouses, working capital requirements, and repaying debts, besides general corporate purposes.
According to analysts, attractive valuations, expected growth in consumer goods market and strong presence in south India were the main reasons behind the IPO’s success.
The company also boasts of a healthy balance sheet. Despite the pandemic, its revenue from operations recorded a compounded annual growth rate (CAGR) of 17.09 percent from Rs 3,172.47 crore in FY20 to Rs 4,349.32 crore in FY22. Its three-year average return on equity and return on capital employed are 16 and 18 percent, respectively.
Angel Broking, Elara Capital, ICICI Direct, Hem Securities, Choice Broking, Indsec and Nirmal Bang had recommended a ‘subscribe’ rating to the issue.
“Being the fourth largest consumer durables and electronics retailer in India and the largest in South India, EMI enjoys favourable terms of pricing/margins from brands due to its scale – this is a key advantage,” Jehan Bhadha of Nirmal Bang said.
Indsec Securities is bullish on the company on the back of improvement in per capita income and growing urbanisation driving sales of consumer durables and other electronic products.
“We believe that in the coming festive season, demand for electric equipment will increase on account of improvement in macroeconomic indicators and increased per capita income,” it added.
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