Electronics Mart India Ltd’s (EMIL) Rs 500 crore-IPO will open for public subscription on Tuesday (4 October) and will conclude on 7 October. The price band for the issue has been fixed at Rs 56-59 per share. The consumer durables retail chain’s IPO consists of a fresh issue of equity shares aggregating to Rs 500 crore, with no offer for sale (OFS) component. The company intends to utilise the net proceeds from the initial share sale to fund its capital expenditure, and support incremental working capital requirements. The proceeds will also go towards paying debt, and for general corporate purposes. Ahead of the IPO opening, Electronics Mart India shares were commanding a grey market premium (GMP) of Rs 33 per share.
Should you subscribe to the Electronics Mart IPO?
Angel One: Subscribe
“In terms of valuations, the post-issue P/E works out to 21.8x FY22 EPS (at the upper end of the issue price band) which is low compared to its peer Aditya Vision Ltd. Further, EMIL has better revenue growth (CAGR of 17%) over 2 years, better return on equity and an expansion plan on the cards. Considering all the positive factors, we believe this valuation is at reasonable levels. Thus, we recommend a SUBSCRIBE rating on the issue,” the brokerage said.
Nirmal Bang: Subscribe
“Being the 4th largest consumer durable and electronics retailer in India and the largest in South India, EMI enjoys favorable terms of pricing/margins from brands due to its scale – this is a key advantage. EMI has demonstrated superior performance among all major consumer durable and electronics retailers in India in terms of growth with revenue CAGR of 26% over FY15-20 (pre-covid) and also managed to deliver respectable ROE of 17.4% during the covid impacted year of FY22. We believe EMI is being offered at attractive valuations at PE of 21.8x FY22 & EV/EBITDA of 9.7x FY22. We recommend subscribing to the issue,” Nirmal Bang analysts said in a note.
Choice Broking: Subscribe
“Peer comparison and valuation: At the higher price band, EMIL is demanding an EV/Sales multiple of 0.7x, which is lower than the above peer average. Considering the expected growth in the business, we feel the IPO is attractively priced. Thus we assign a “SUBSCRIBE” rating for the issue,” Choice Broking said in a note.
Hem Securities: Subscribe
“Company is bringing the issue at a price band of Rs 56-59 per share at p/e multiple of 17x on post issue FY22 PAT basis. The company is the 4th largest consumer durable and electronics retailer in India with a leadership position in South India. Company’s scale of operations along with its long-standing relationship with leading consumer brands enables it to procure products at competitive rates. The company being one of the fastest growing consumer durable and electronics retailers with a consistent track record of growth and industry-leading profitability has a business model that provides operational flexibility to create a long-term sustainable footprint. Hence, looking at all the above, we recommend “Subscribe” on the issue.” Hem Securities said in a note.
(The recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)