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Wednesday, March 8, 2017

Avenue Supermarts Ltd IPO at a Glance


Issue Highlights

Issue Period
8/3/17-10/3/17
Price Band (Rs.)
295-299
Issue Size(shares)
6,25,41,806
Issue Size (Rs. crore) #
1870
Issue Type
100% Book built
Face Value (Rs.)
10
Listing
BSE,NSE
Industry
Supermarket chain
Registrar
Link Intime India Pvt Ltd
Minimum Bid Quantity
 50 shares
Maximum Retail Subscription (Rs.)
1,94,350 (13 lots)
BRLM
Axis cap, Edelweiss Cap, Kotak, HDFC Bank, ICICI sec, INGA, JM Fin, Motilal Oswal
# derived figure

Issue Details


Offer for Sale:  Nil
Fresh Issue: 1870 crore
Equity Shares Outstanding Prior to the Issue:  56,15,42,680
Equity Shares Outstanding After the Issue #:  62,40,84,490

Objects of the Issue

(1)   Loan repayment and earlier redemption of NCDs: Rs. 1,080 crore
(2)   Construction and purchase of fit outs for new stores: Rs. 366.6 crore
(3)   General Corporate Purposes : NA

Company Profile

The company is India’s most profitable Food & Grocery retailer with a focus on various product categories like food, FMCG, apparel and general merchandise. Presently, ASL boasts 112 retail stores with a business area of 3.4 million sq. ft. located across 41 cities in Maharashtra (58), Gujarat (26), Telangana (13), AP (3), Karnataka (7), MP (3), Chhattisgarh (1) and NCR (1).


Risks & Threats

1.      The USP of such super markets lies in the discounts and various offers which are achieved through supplier relations; if such stores fail to offer these perks then revenue shall be negatively affected
2.      The company operates in highly competitive market with players like Big Bazaar, Reliance Retail, Spencer’s, Hyper City, Star Bazaar etc. besides organized retail chains like Max, Westside and neighborhood unorganized retail Kirana shops
3.      The business is manpower and capital intensive one
4.      Around 53 % of the revenue comes from the sales of food products and this category is prone to continuously changing customer taste
5.      Around 81 % of the revenue comes from stores in Maharashtra and Gujarat and such geographical concentration could be a concern during some adverse developments taking place in the region

Strengths & Opportunities

(1)   The company owns the underlying real estate of its stores and hence this company is a proxy for real estate investment and might give fat benefits in future
(2)   The company enjoys one of the lowest inventory days in the market
(3)   The bottom-line and top-line are growing at an CAGR of 52% and 40 % respectively
(4)   Growing urban young and working population augurs well for company’s revenue growth

Financial Profile #

Parameter
FY 16
Price-to-Earnings Ratio ##
52.27
PEG (4 year)##
1.01
Operating Profit Margin
6.77
Net Profit Margin (%)
3.73
Return on Capital Employed (%)
23.46
Return on Equity (%)
23.62
Total Liability to Net worth
1.04
Price to Book Value ##
11.04
EV/EBITDA
26.9
OCF/NP
1.4
Inventory Days
29.73
TIE
6.42
M-Cap/Sales
1.95
Accrual Ratio
4.38
# at upper price band
## using post issue OS shares

Comparison with the listed Peers #


NPM (%)
ROCE(%)
ROE(%)
PEG
Inventory Days
EV/ EBITDA
ASL
3.73
23.46
23.62
1.01
29.73
26.9
Future Retail Ltd
.21
.66
.81
NM
175.48
NA
Trent Ltd
5.18
5.1
5.5
NM
65.64
32.38

# moneycontrol data




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