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Incorporated in 1980, Electronics Mart India Limited is the 4th largest and one of the fastest growing consumer durables and electronics retailers in India. 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. Its offering includes more than 6,000 SKUs across product categories from more than 70 consumer durable and electronic brands.

* The Company?s business model is a mix of ownership and lease rental model, as it focus to secure retail spaces which ensures high visibility and easy accessibility to customers.

* Out of the total 112 stores it operate, 11 stores are owned, 93 stores are under long-term lease rental model and eight stores are partly owned and partly leased.

* The Company has been steadily increasing its market reach to cover 14 cities in Andhra Pradesh, 20 cities in Telangana and two cities in the NCR region, as on August 31, 2022.

* As of August 31, 2022, out of 112 stores, 100 stores are Multi Brand Outlets (“MBOs”) and 12 stores are Exclusive Brand Outlets (“EBOs”). They operate 89 MBOs under the name “Bajaj Electronics” in Andhra and Telangana, 8 MBO under the name of “Electronics Mart” in the NCR region, 2 specialized stores under the name “Kitchen Stories”

Outlook & Valuation:

: India's consumer durable and electronics industry is underpenetrated and has a long runway of growth. However, the industry is characterized by intense competition, with only scale serving as a meaningful moat or competitive advantage. E-commerce players have also been a significant disruptor to the offline market, completely altering its dynamics by presenting alluring discounts and offers. The mobile phone industry has witnessed the highest impact due to the rising trend of e-commerce and the company generates ~1/3rd of its revenues from its mobile division. Additionally, offline competitors with huge access to capital, like Croma and Reliance Retail, can easily penetrate the market and take market share away from the company. The company is currently expanding into the NCR region after being successful in gaining a sizeable market share in Andhra and Telangana. However, given the industry's intense competition, this will be an arduous task. Nevertheless, the company's valuation (P/E of 21.85 based on FY 22 numbers) and the industry's promising growth prospects give some comfort despite the aforementioned concerns. Thus, this issue is suitable only for investors with an aggressive risk appetite.

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