The Rs 500 crore Initial Public Offering (IPO) of Electronics Mart India Ltd. (EMIL) will begin on Tuesday, October 4, and end on October 7. The issue's price range has been set at Rs. 56–59 per share. The consumer durables retail chain's initial public offering (IPO) comprises a brand-new equity share issue totaling Rs 500 crore that does not include an Offer For Sale (OFS). The firm plans to use the net proceeds from the inaugural share offering to support additional operating capital needs as well as finance its capital expenditure. Additionally, the money will be used to pay off debt and for other corporate needs. Shares of Electronics Mart India were trading for a grey market premium (GMP) of Rs 33 per share prior to the start of the IPO.
“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 stated.
“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,” according to analysts at Nirmal Bang.