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D-Mart IPO (Avenue Supermarts IPO) Allotment Status – Details, Review

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The shares for D-Mart / Avenue Supermarts is allocated now. You can check the allotment status for D-Mart IPO (Avenue Supermarts IPO at the registrar link (Link Intime) below:

http://www.linkintime.co.in/publicissues/default.aspx

I applied for 100 shares and was allocated 50 shares. See screenshot. 

Avenue Supermarts has opened its IPO on 8th March 2017.  It is the operator company of D-Mart supermarkets.

The retail chain’s IPO is also significant on the back of its strong promoter entity, Radhakishan Damani. He is considered among the major names in the markets as a trader and value investor and this is considered to be his entry into the big league.

 Issue Details of Avenue Supermarts IPO (operator of D-Mart):  

  • IPO Open :  8th March to 10th March 2017
  • Issue Price band: Rs 295 – 299 per share
  • Issue Size: Rs 1870 crores  ( 6.23 crores shares)
  • Market lot :  50 shares
  • Minimum Investment:  Rs 14950 (Upper band)
  • Maximum Retail investment – 650 shares – Rs 194350 (at upperband)
  • Book Running Lead Managers :  Kotak Mahindra, Axis, Edelweiss, ICICI Sec, JM Sec, Motilial, SBI, Inga
  • Registrar –
  • Listing: BSE/NSE

IPO Issue Allocation

  • Qualified institutional buyers (QIBs) –  50% of the total issue size.
  • Non-institutional investors (NIIs) –  15% of the issue size.
  • The retail quota limit in the issue = 35% of the issue size.

 Background:

Avenue Supermarts owns and operates hypermarkets and supermarkets retail chain D-Mart. Owned by investor Radhakishan Damani, D-Mart is a pure food and grocery retailer

D-Mart, which launched its first store in 2000, has focused solely on expanding its hypermarket retail chain.

Currently, there are around 110 D-Mart hypermarket stores in 26 cities. On an average, the company has been opening 10-15 stores per annum and hopes to continue or accelerate it depending on the market.

As of August 31, 2016, the company had 4,225 full-time employees and also higher number of employees on contract.

Number of Stores:

State No of Stores Revenue Share
Maharashtra 58 62.50%
Gujarat 26 18.80%
Telangana 13 10%
Karnataka 7 6%
Andhra Pradesh 3 1%
Madhya Pradesh 3 0.70%
Chattishgarh 1 0.50%
NCR 1 0.50%
     
  112  

Revenue Segments

  2016 2015 2014 2013 2012
FMCG 53% 53% 53% 53% 53%
Non FMCG 21% 21% 21% 21% 21%
General Mechandise 26% 26% 26% 26% 26%

Promoters holdings:

Promoter & Promoter group holds 91% shares. Top promoters are Radhakishan Damani (43.8%) , Bright Star (15.8%), Gopikishan Damani (13.72%)

Objective of the issue:

  • Repayment or prepayment of a portion of loans and redemption or earlier redemption of NCDs availed by our Company – 1080 crores
  • Construction and purchase of fit outs for new stores – 367 crores
  • General Corporate purposes

Anchor Investors:  

The company has raised Rs 561 crore by allotting 1.87 crore shares to 35 anchor investors at the upper price band of Rs 299 apiece.

Government of Singapore, JP Morgan, Smallcap World Fund, New World Fund, Fidelity, T Rowe Price, HDFC MF, Reliance MF, ICICI Prudential MF and SBI MF are among the anchor investors.

Financials:

  2016 2015 2014 2013 2012
  In Rs Crores         
Revenue 8606 6458 4702 3355 2222
Revenue Growth 33% 37% 40% 51%  
           
Net Profit 321 212 161 94 61
Net Profit Growth 51% 32% 71% 54%  
           
Equity + Reserves 1521 1200 956 789 684
Long term Borrowings 908 714 457 371 264
Debt Equity Ratio 0.78 0.75 0.67    
           
           
EPS 5.72 3.87 2.95    
RoNW 21% 17.60% 16.80%    

D-Mart’s better financial performance in comparison to its peers has been driven by its differentiated business model, wherein 90% of D-Mart stores are located in properties owned by the firm, unlike most retail firms which are burdened by the high cost of rentals.

Risks:

Valuation as compared to its peers:

  EPS PE
Avenue Supermart 5.72  
Future Retail 0.66 240
Trent 18.94 124

At the higher price band of Rs 299, the offer is valued at 36 times P/E and 1.6 times M.Cap/sales on 9MFY17 annualised basis (post dilution).

While there are no direct comparable, companies like V-Mart (40 times P/E on FY17E), TrentBSE (49 times) and Future Retail (34 times) having significant retail presence are trading at higher valuations.

Should you consider investing:

SP Tulsian Subscribe
Choice Broking Subscribe
Yes Securities Subscribe
IIFL Subscribe
 Ambit Capital  Subscribe
 Reliance Sec  Subscribe
Emkay Global Subscribe
Angel Broking Subscribe
KR Choksey Subscribe

The performance of the company is better than its listed big peers. Continous growth in Revenue & net Profit growth. Also the promoter (Rakesh Damani) is one of the reputed investor.

Investors can consider subscribing for this IPO for medium to long term.

Disclaimer:  The articles or analysis on this website should not be constituted as Investment advice. Please consult your financial advisor before making any investments.

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

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