Samco securities limited

Electronics Mart India Limited IPO

Add to Calendar 2022-10-04 12:00 AM 2022-10-07 12:00 AM Asia/Kolkata Electronics Mart India Limited IPO Electronics Mart India Limited India

Objects of the issue

1. Funding of capital expenditure for expansion and opening of stores and warehouses - 111 cr
2. Funding incremental working capital requirements - 220 cr
3. Repayment/prepayment, in full or part, of all or certain borrowings availed by the Company - 55 cr
4. General Corporate Purposes - 115 cr

Company Overview

Electronics Mart India Limited (EMIL) commenced its business in 1980 as a proprietary concern with a consumer durable electronics store in Hyderabad. The company is the 4th largest and one of the fastest growing consumer durables and electronics retailers in India and has grown at a revenue CAGR of 17.9% from FY16 to FY21. 

As of FY21, the firm is the largest regional organized player in the southern region in revenue terms with dominance in the states of Telangana and Andhra Pradesh. EMIL is a multi-brand consumer durable and electronics retailer dealing in home entertainment, mobiles, laptop, home appliances, camera, kitchen appliances, and personal care. 

EMIL offers a diversified range of products with a focus on large appliances (air conditioners, televisions, washing machines and refrigerators), mobiles and small appliances, IT and others. The company's offering includes more than 6,000 SKUs (stock keeping units) across product categories from more than 70 consumer durable and electronic brands. The company operates its business activities across three channels retail, wholesale and e-commerce. 

Key Strengths

4th largest consumer durable and electronics retailer in India with a leadership position in South India
One of the fastest growing consumer durable and electronics retailer with consistent track record of growth and industry leading profitability
Increasing market presence and geographic reach with cluster-based expansion
The business model provides operational flexibility to create long term sustainable footprint
Diversified product offering & optimal product assortment leveraging the deep knowledge and understanding of regional markets
Strategically located logistics and warehousing facilities backed by stringent inventory management using IT systems
Robust customer service support, timely delivery & installation support
Experienced management team with a proven track record

Key Risks

The majority of the company’s stores are presently concentrated in Andhra Pradesh and Telangana. Their stores are concentrated mainly in Telangana and Andhra Pradesh, and they generate a majority of their retail sales from the stores in these states. Any adverse developments in these states could have an adverse impact on their revenue and the results of operations.

Competition from online retailers who are able to offer products at competitive prices and are also able to offer a wide range of products may adversely affect the business and financial condition, results of operations and cash flows.

A large part of the revenue (~61-65%) is dependent on their top five brands. The loss of any of the major brands or a decrease in the supply or volume from such brands, will materially and adversely affect its revenues and profitability.

Conclusion

In terms of valuation, the company commands an attractive valuation at a P/E of 21.77x at the upper price band based on its average 3 years EPS. 
Rating: “Subscribe for listing gains” rating to the stock.

Issue Detail

  • Issue Open: Oct 04, 2022
  • Issue Close: Oct 07, 2022
  • Issue Type: Book Built Issue IPO
  • Face Value: Rs.10 per equity share
  • Price Band: Rs. 56 to Rs. 59 per share
  • Bid Lot:254 Shares
  • Minimum Order Quantity:254 Shares
  • Listing At: BSE, NSE
  • Issue Size: ?500.00 Cr

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