IPO Note: Electronics Mart India Ltd By Marwadi Financial Services
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Company’s Overview
* Electronics Mart India Ltd is 4 th largest and one of the fastest growing consumer durables and electronics retailers in India. As of FY 2021, the company is the largest regional organized player in the southern region in revenue terms with dominance in the states of Telangana and Andhra Pradesh
* The company offers a diversified range of products with focus on large appliances (air conditioners, televisions, washing machines and refrigerators), mobiles and small appliances, IT and others. The offering includes more than 6,000 SKUs across product categories from more than 70 consumer durable and electronic brands.
* The business model of the company is a mix of ownership and lease rental model. Under the ownership model, the company owns the underlying property including the land and building and in lease rental model, the company enter into a long-term lease arrangement with the property owner(s).
* The company has 112 stores across 36 cities / urban agglomerates with a retail business area of 1.12 million sq. ft. Out of the total 112 stores the company operates, 11 stores are owned, 93 stores are under long-term lease rental model and eight stores are partly owned and partly leased.
* The company operates business activities across three channels of retail, wholesale and e-commerce. Retail Channel contributed 91.01% whereas Wholesale and Ecommerce channel contributed 1.48% and 1% respectively to the total revenues for the financial year 2022.
* The company retailslarge appliance products from leading brands including LG, Panasonic, Philips, Sony, Godrej, IFB, Daikin, Symphony and Voltas; mobiles from brands like Vivo, Oppo and OnePlus and other small appliances like laptops, geyser, coolers, speakers, headphones, kitchen appliances, etc from brands like Dell, Sony, Butterfly, Havells, Orient.
Valuations
* Considering the FY22 (adjusted) / FY23 (annualized) EPS of Rs.2.70/ Rs. 4.23 on a post issue basis, the company is going to list at a P/E of 21.85x/ 13.96x with a market cap of Rs.22,700 mn while its peer namely Aditya Vision is trading at a P/E of 32.7x.
* We assign “Subscribe” rating to this IPO as company is the fourth largest consumer durable and electronics retailer in India with a leadership position in South India. Also, it is available at discounted valuation as compared to its peer.
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