Mumbai: Electronics Mart India’s initial public offering investors have reason to celebrate as the company debuted on the stock market on Monday with a significant premium of more than 50% over its issue price.
It was listed with 52% and 53% premiums over its issue price on the Bombay Stock Exchange and the National Stock Exchange, respectively, exchange data showed. The price band for the shares was kept with an upper band of Rs 59 during the IPO.
During the stipulated window for the public issue worth Rs 500 crore, which closed on October 7, the shares of the company received bids totalling a whopping 71.93 times.
“The company’s strong listing can be attributed to strong interest from investors, reasonable valuations, and a sanguine growth outlook. The company is the 4th largest consumer durable and electronics retailer in India with a leadership position in South India, having the majority of its stores located in Telangana and Andhra Pradesh,” said Pravesh Gour, Senior Technical Analyst at Swastika Investmart.
“Further, the company faces significant competition from players like Reliance Retail, Croma, etc. Therefore, we advise investors to lock in listing gains, and only aggressive investors should consider making a long-term commitment to the company. Those who applied for listing gains can maintain a stop loss of Rs 77”, added Gour.
Proceeds from the fresh issue are likely to be utilized to fund the expansion of retail stores and warehouses, to fund the incremental working capital requirement; and for re-paying/pre-paying certain borrowings availed by the company.
The consumer durables (which includes large consumer durables, mobile phones, and smaller appliances) retail market is estimated at Rs 3-3.2 lakh crore in FY22, said brokerage firm Choice Broking.
“This market has clocked a business growth of around 12 per cent CAGR between FY17-20, mainly on the back of increasing disposable incomes, lower penetration, widened product base, competitive pricing, lowering replacement cycles and an expanding product portfolio. Going forward, the consumer durable appliance market is anticipated to grow by 10-12 percent CAGR over FY22-27 to reach a size of Rs. 4.8-5.3 lakh crore,” the brokerage said.
Electronics Mart India is a major consumer durables and electronics retailer in India with a leadership position in South India. The scale of operations and long-standing relationships with leading consumer brands enable the company to procure products at competitive rates.
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