Electronics Mart IPO: Second most subscribed issue this year, why investors buy hurriedly? – Electronics Mart India IPO second most subscribed ipo this year till date know here what hit with investors

Electronics Mart India’s IPO proved to be the second biggest issue of 2022 this year in terms of subscriptions. The Rs 500 crore IPO opened between October 4-7 and was subscribed 71.93 times. Beyond this, in 2022, there was only the issue of Harsha Engineers, which was subscribed 74.70 times.

Retail investors also showed great interest regarding Electronics Mart’s IPO. The share reserved for them was subscribed 19.71 times. The share of Qualified Institutional Buyers (QIBs) was subscribed 169.54 times and that of Non-Institutional Investors (NII) 63.59 times.

Why did you get so many bids?

The question that arises is why investors found the issue so attractive. According to analysts, the attractive valuation of the issue, strong growth prospects in the sector and strong presence of the company in South India made investors crazy about the IPO. Electronics Mart is the fourth largest consumer durables and electronics retailer in the country.

Electronics Mart has 112 stores across Telangana, Andhra Pradesh and Delhi-NCR. However, about three years ago, in FY19, it had only 59 stores. The company aims to open 58 new stores in the financial year 2025-26.

What do the experts say

According to Harshit J Kapadia, Vice President, Elara Securities, the valuation of Electronics Mart was cheap. Based on the upper price in the Rs 56-59 price band, it is valued at 18.5x P/E while its peers like Aditya Vision are valued at 23.7x FY22. According to Kapadia, there is a growing trend among customers to shop at modern format large retailers as compared to retail electronic stores. Due to this, the IPO of Electronics Mart looked attractive.

Arpit Jain, Joint MD, Arihant Capital, says the demand for consumer goods is looking good and this could benefit Electronics Mart as it is the market leader in e-retail. According to Arpit, the trend in the company’s IPO has also turned positive due to the spurt in demand in the festive season.

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The money raised will be used for

Under this issue, Electronics Mart will issue fresh equity shares worth Rs 500 crore to IPO investors. Rs 111.44 crore raised through issue of new shares will be used to meet capital expenditure, Rs 220 crore to meet increased working capital requirements and Rs 55 crore to pay off debt.

Details about the company

Electronics Mart India was started by Pawan Kumar Bajaj and Karan Bajaj. It has 112 stores in 36 cities/towns, mostly in Andhra Pradesh, Telangana and NCR. Talking about the financial health of the company, in the last financial year 2021-22, the revenue from operations was Rs 4349.32 crore as compared to Rs 3201.88 crore a year ago.

On the other hand, in the financial year 2021-22, the net profit on an annual basis fell from Rs 103.89 crore to Rs 40.65 crore. The company’s working capital facilities stood at Rs 919.58 crore as of August 2022, while net debt stood at Rs 446.54 crore as of June 2022.

Disclaimer: The advice or views given on moneycontrol.com are the personal views of the expert/brokerage firm. Website or Management is not responsible for this. Moneycontrol advises users to always consult a certified expert before taking any investment decision.

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