Electronics Mart India IPO from the the largest regional organized player in the southern region in revenue terms aims to raise Rs 500 crore entirely as a fresh issue. The company enjoys dominance in Telangana and Andhra Pradesh. Electronics Mart India is the 4th largest consumer durable and electronics retailer in India.
| Bidding date | 4th – 7th Oct 2022 |
| Issue Size (₹ Cr) | 500 |
| Issue Size (Shares) | 89,285,714-84,745,762 |
| Face Value | 10 |
| Bid Lot shares | 254 and multuples |
| Price Band | ₹ 56 – 59 |
| Issue Structure : | |
| QIB | 50% |
| NIB | 15%, 12,711,865 shares |
| Retail | 35%, 29,661,017 shares, 175 Cr. |
| Appl. for 1x Retail | 3.03 Lac |
About Electronics Mart India
- Electronics Mart India Ltd was set up in 1990 by Pavan Bajaj and Karan Bajaj.
- It is 4th largest consumer durable and electronics retailer in India.
- It offers a wide variety of electronic products such as large appliances, mobiles and small appliances, IT and others to its customers.
- As of August 31, 2022, out of 112 stores, 100 stores are Multi Brand Outlets (“MBOs”) and 12 stores are Exclusive Brand Outlets (“EBOs”).
- It operates 89 MBOs under the name “Bajaj Electronics” in Andhra and Telangana, 8 MBO under the name of “Electronics Mart” in the NCR region, 2 specialized stores under the name “Kitchen Stories” which caters to the kitchen specific demands of their customers and 1 specialised store format under the name “Audio&Beyond” focusing on high end home audio and home automation solutions.
- EMIL offers a diversified range of products with focus on large appliances (air conditioners, televisions, washing machines and refrigerators) mobiles and small appliances which contributed about 53.8%, 30.8% and 15.4% of FY22 revenue respectively.
Anchor Book: Electronics Mart India IPO
Electronics Mart India Ltd raised Rs 150 crore through its anchor book, ahead of the opening of its IPO.
A total of 20 anchor investors have invested in the company through the anchor book, including Nippon Life India, HDFC Trustee, Pinebridge Global Funds, Motilal Oswal MF, Tata MF, Sundaram MF, Whiteoak Capital, Aditya Birla Sun Life Insurance, Abakkus Emerging Opportunities Fund, Societe Generale, and Mirae Asset.
Electronics Mart India IPO: Financials
| Particulars / (₹ Cr) | 3mfY23 | FY22 | FY21 | FY20 |
| Revenue from Operations | 1,408.45 | 4,349.32 | 3,201.88 | 3,172.48 |
| EBITDA | 97.04 | 291.94 | 203.88 | 227.64 |
| EBITDA Margin (%) | 6.89% | 6.71% | 6.37% | 7.18% |
| Profit before Tax | 55.1 | 139.76 | 79.56 | 112.18 |
| Net Profit | 40.66 | 103.89 | 58.62 | 81.61 |
| Net Profit Margin (%) | 2.89% | 2.39% | 1.83% | 2.75% |
| Equity Share Capital | 300 | 300 | 300 | 300 |
| Net worth | 637.97 | 596.51 | 491.92 | 433.08 |
| RoNW (%) | 6.37% | 17.42% | 11.92% | 18.84% |
| Net Asset Value (₹) | 21.27 | 19.88 | 16.4 | 14.44 |
| RoCE (%) | 6.95% | 18.87% | 14.35% | 20.28% |
| Post Issue share Cap | 384.75 | |||
| FV in Rs. | 10 | |||
| IPO price | 59 | |||
| EPS post IPO FY22 | 2.7 | |||
| PE | 21.9 | |||
| Market Cap Rs. Cr. | 2270 | |||
| Market Cap/Sales | 0.52 |
Salient Points
- Post the IPO stake of the promoters will come down from the current 100% to 77.97%.
- Of the net proceeds from IPO, Rs 111.441 crore are earmarked towards funding of capital expenditure (largely opening of stores and warehouses); Rs 220 crore towards incremental working capital requirements and Rs 55 crore towards repayment / prepayment of certain borrowings.
- Electronics Mart India intends to set up 58 stores (48 MBOs and 10 EBOs) over FY23-25 in Telangana, AP and the NCR region and 1 warehouse in NCR during FY24, from the net proceeds of the fresh issue.
- Follows a cluster model for opening stores.
- Average store size is 8-10000 sq ft.
- The company operates across Retail, Wholesale and E-Commerce.
- Retail channel includes 88 Multi Brand Outlets and 11 Exclusive Brand Outlets. Through the wholesale business of consumer durables, the company supplies products to single-shop retailers in Andhra Pradesh and Telangana region. The company leverages the e-commerce website as a catalogue for its products at retail stores. focus is on offline mode.
Concerns
- Operating in a highly competitive industry.
- High geographical concentration in AP & Telangana
- copy right issue with Bajaj electricals.
Electronics Mart India IPO: Assessment
- Strategically located logistics and warehousing facilities backed by stringent inventory management.
- It operates 9 large warehouses with 6 large warehouses in Hyderabad to cater to the Telangana region, one central warehouse in Vijayawada to cater for the Andhra Pradesh region and two warehouses in NCR to cater to the NCR region.
- Has long-term relationship with various renowned brands like LG, Panasonic, Philips for large appliances, Oppo, One Plus, Vivo for mobiles and Dell, Sony, Havells for small appliances, IT & other products.
- Strong brand presence under the name ‘Bajaj Electronics’ in Telangana and AP markets. They together contribute about 99.5% of total retail sales revenue in Q1FY23.
- Electronics Mart India is expanding to new geographies i.e. the NCR market.
- Electronics Mart India business model is a mix of ownership and leases rental. Out of total 112 stores, 11 are owned by the company, 93 are under a long-term lease rental model, while 8 are partly owned and partly leased.
- Electronics Mart India clocked topline growth at a CAGR of 17.9% during FY16-FY21.
- With around 60 new stores planned during FY23-FY26, one can look to good growth in topline in future.
- Net debt to equity ratio to become almost zero.
- India Ratings Affirmed Electronics Mart India rating at ‘IND A-’; Outlook Stable in July 2022.
- Electronics Mart India peers included names like Reliance Retail, Croma, Vijay Sales and Aditya Vision. Amongst these peers, EMIL has one of the highest sales per store and operating margins.
- The offer at upper price band, Electronics Mart India IPO is priced the at 21.9 times its FY22 EPS.
Electronics Mart India IPO: Apply or Not
Risk : Moderate to Low
Expected Reward : Moderate to Good Profit.
Listing Gains : Likely. Current GMP Rs. 27
Hold for Medium/ Long Term: Looks OK
Subscription : Expected to be Good
I am likely to apply in this IPO
Above are my views only. Please do your own diligence.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.