Party time for those who have invested in initial public offerings of Electronics Mart India as the company on Monday made the stock market debut with a sharp premium of over 50 per cent against its issue price. It listed with 52 per cent and 53 per cent 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.
Electronics Mart India is a major consumer durable and electronics retailer in India with a leadership position in South India. The scale of operations and long-standing relationship with leading consumer brands enable the company to procure products at competitive rates. “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.
India’s consumer durable and electronics industry is underpenetrated and has a long runway of growth. Nevertheless, the electronic and consumer durable market is extremely competitive and has been disrupted by e-commerce players. “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.
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 whopping 71.93 times. 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 durable appliance (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 per cent CAGR over FY22-27 to reach a size of Rs. 4.8-5.3 lakh crore,” the brokerage said.