The IPO from Avenue Supermarts, the company which runs the D-Mart chain of food and grocery supermarkets, opened for subscription this morning, and has evoked fairly good response so far, having received bids for 0.58 times of the issue size.Total issue size is 44.3 million shares. Out of total bids for nearly 26 million shares received till an hour past noon, about 14.4 million are at cut-off price.The company has fixed the price band for the issue at Rs 295 – Rs 299. The IPO is priced at a PE of about 58.5 times its consolidated FY16 EPS and about 36.1 times its nine-months ended December 2017 annualized profits. Thus it looks fairly priced.Avenue Supermarts raised Rs 561 crore ahead of the IPO, by selling shares to anchor investors, at the rate of Rs 299 per share, the upper band of the issue. The anchor investors who were allotted the shares included New World Fund, Smallcap World Fund, Governmnt of Singapore, Fidelity, T Rowe Price, JP Morgan, ICICI Prudential Mutual Fund, HDFC Mutual Fund and SBI Mutual Fund.The company aims to raise Rs 1870 through the issue (including the funds mopped up from anchor investors). Out of this the company plans to utilise Rs 1080 crore to repay its debt and Rs 300.6 crore to buy and build new stores.Avenue Supermarts reported a net profit of a little over Rs 300 crore for the nine months ended December 2016. It recorded total revenues of Rs 8800 crore for the period.For the nine-month ended December 2016, Avenue Supermarts posted a net profit of Rs 387.4 crore. For the year ended March 31, 2016, the company posted a net profit of Rs 318.75 crore, against Rs 211.6 crore in the previous year.Avenue Supermarts’ D-Mart brand operates 118 stores, over a 3.59 million sq. ft of store space across 45 cities. A major chunk (59%) of the company’s sales come from Maharashtra and Daman. Gujarat accounts for 18% of the company’s sales.Kishore Biyani’s Future Retail and RPG Group’s Spencer Retail are among the major competitors of Avenue Supermarts.
July 26, 2024
