Electronics Mart IPO: Should you subscribe to the issue?
Elara Securities said Electronics Mart India may continue to grow at a healthy pace in terms of store expansion, especially in North India.
The Rs 500-crore initial public offer (IPO) by Electronics Mart India opened for subscription on Tuesday.
The Hyderabad-based consumer durables retailer is offering shares in the Rs 56-Rs 59 price band.
Elara Securities said Electronics Mart India may continue to grow at a healthy pace in terms of store expansion, especially in North India, and given the customer shift toward modern format large retailers.
It noted that the company's FY22 return on equity and return on capital employed stood at 18 per cent and 14 per cent, respectively.
"At the upper price band, the stock is demanding a valuation of 18.5 times FY22 EPS, which is significantly lower than peer Aditya Vision that trades at 23.7 times FY22 EPS.
Based on conservative estimates, Choice Broking said it is forecasting a topline to grow 16.3 per cent compounded annually over FY22-24 to Rs 5,887.40 crore in FY24.
Post the IPO, promoter stake would be reduced to 77.1 per cent at the lower price band and 78 per cent at the upper. At the upper price band, the company would command a market capitalisation OF Rs 2,270 crore.
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