D-Mart operator enters top 20 club by market capitalisation, eyes Rs 4,098 crore via QIP

By: and |
February 6, 2020 3:50 AM

It is noteworthy that shares of Avenue Supermarts rose a whopping 22.4% since the beginning of this year.

D-Mart operator, Avenue Supermarts, market capitalisation, ONGC, Wipro, Ultratech Cement, Sensex, CAGRAt the close on Wednesday, D-Mart’s market value was stood at Rs 1.41 lakh crore, which is higher than that of marquee names like Wipro, ONGC, Ultratech Cement, Titan, Coal India among others.

Nearly three years after its stellar debut, Avenue Supermarts on Wednesday entered the elite club of top 20 companies by market capitalisation, as investors continued to favour the retailer’s execution capacity and the single format focus. At the close on Wednesday, D-Mart’s market value was stood at Rs 1.41 lakh crore, which is higher than that of marquee names like Wipro, ONGC, Ultratech Cement, Titan, Coal India among others.

FE has learned that the company is launching a qualified institutional placement (QIP) to raise Rs 4,098 crore that could lead to a dilution of upto 3.2% of pre-issue outstanding equity share capital. Post the QIP, the promoter holding in the company will come down to 77.3% of post-issue outstanding equity share capital. The indicative offer price for the issue stands at Rs 2,049 per share, which is at an 8.9% discount to the last traded price. Shares of Avenue Supermarts closed 4.35% up at Rs 2,249.30 per share on the BSE on Wednesday. The proceeds from the QIP will be used for augmenting long-term resources for financing future expansion plans and repaying/prepaying a part of the existing debt.

It is noteworthy that shares of Avenue Supermarts rose a whopping 22.4% since the beginning of this year. To give a perspective, the benchmark Sensex is down 0.30% in the same period. With the market cap rising over three-and-a-half times since its listing, the retail giant’s market value has now grown to more than double the size of six of its rivals — Trent, Aditya Birla Fashion, Future Retail, Future Consumer, Vmart retail and Shoppers Stop — put together. In the process, veteran investor Radhakishan Damani, the man behind D-Mart, saw his net worth climbing to $11.3 billion surpassing several of the big names of India Inc including Gautam Adani and Sunil Mittal, showed Bloomberg Billionaires Index.

According to the index, Radhakishan Damani is now ranked as sixth richest person in India.
Nirali Shah, senior research analyst, Samco Securities, said, “The stock is currently trading at a extremely high P/E and, therefore, investors should wait for a correction before getting into the stock.”
Promoter shareholding in holding reduced by 0.48% during the December quarter to 79.73%. The founders have to meet minimum public shareholding of 25% by March 2020. JP Morgan, which has a “Neutral” rating on the stock observed the pace of store additions is improving with 20 additions in the first nine months of FY20, which compares favourably to 21 added in the whole of FY19 and 12 added in nine months of FY19.

“D-Mart remains a key beneficiary of rising share of organised grocery retail chains (from unorganised general trade) aided by its low price-low cost positioning,” the brokerage said in a note dated January 15.
The consolidated revenue and EBITDA of D-Mart rose by 24% and 33%, respectively, in Q3FY20, meeting analysts’ estimates. The full year revenue grew at a compounded annual growth rate (CAGR) of 32.6% between FY17 and FY19 which stood at Rs 19,967 crore in FY19 and its consolidated profit after tax for the period expanded at a CAGR of 41.3% to Rs 902 crore during the same period.

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