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Avenue Supermarts IPO Review – Details, Opening Date

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Avenue Supermarts has filed papers with SEBI for its IPO. The IPO will be open for subscription in couple of months:

 Issue Details of XXX IPO:  

  • IPO Open :  
  • Issue Price band: Rs XX per share
  • Issue Size: Rs 1850 crores  ( XX  Shares)
  • Market lot :  XX shares
  • Minimum Investment:  Rs (Upper band)
  • Book Running Lead Managers :  
  • 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:  Will be available one day before the IPO opens

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

Should you invest:  

The performance of the company is better than its listed big peers.  Continous growth in Revenue & net Profit growth. Also the promoter 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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