Electronics Mart IPO subscribed 37% on Day 1 so far. Here's what analysts said  

Electronics Mart India's Rs 500-crore initial public offer (IPO) received a strong demand on Tuesday, especially from retail investors, with bids touching 35 per cent of the issue size within the first two hours of Day 1 bidding process. The issue received bids for 2,20,26,626 shares against the total issue size of 6,25,00,000 shares, NSE data on consolidated bids showed. 

By 11.48 am, retail individual investors(RIIs) had bade for 1,99,33,920 shares, which was 64 per cent of 3,12,50,000 shares reserved for the category. The quota for non institutional investors (NIIs) was subscribed 16 per cent. Qualified institutional buyers (QIBs), meanwhile, bade for 3,556 shares. 

The IPO would conclude on October 7, Friday. 

Also Read: Electronics Mart IPO: Should you subscribe to the issue?

Grey market premium

The issue was commanding a grey market premium of Rs 35 against Rs 32 a day ago, market watchers said. The premium hinted at a healthy listing gain ahead.  

Anchor allotment 
The fourth largest electronics retailers in India garnered Rs 150 crore from anchor investors, ahead of its initial share sale on Monday. The company informed stock exchanges that it allocated 2,54,23,728 shares at Rs 59 per share piece to anchor investors.

Among the foreign Portfolio Investors who participated in the anchor were PineBridge Global Funds, Societe Generale – ODI and Cohesion MK Best Ideas Sub-Trust.

In addition, shares were allocated to domestic funds such as Nippon Life, HDFC Trustee Co Ltd, Motilal Oswal Midcap Fund, Aditya Birla Sun Life Insurance Company, Sundaram Mutual Fund, White Oak Capital Flexi Cap Fund, Abakkus Emerging Opportunities Fund-1, Tata AIA Life Insurance Co Ltd, Mirae Asset Balanced Advantage Fund are among the investors that participated in the anchor book, the company said in a release. 

Electronics Mart@ Rs 201?
Analysts are mostly positive on the company's prospects. But one among them, Ventura Securities, believes the stock, when it gets listed, could potentially touch Rs 201 level in the long term. 
 
"With strong potential for revenue growth and scope for further improvement in profitability, we recommend a SUBSCRIBE rating for a target price of Rs 201 (40.1 times FY25 PE) for long-term gains," it said.

The brokerage is expecting the company to report a revenue CAGR of 19.4 per cent, Ebitda CAGR of 22.1 per cent and PAT CAGR of 22.9 per cent over FY22-25E. 

"Ebitda and net margins are expected to improve 46 bps to 7.2 per cent and 22 bps to 2.6 per cent, respectively. Subsequently, return ratio RoE is expected to decline 526 bps to 12.2 per cent & RoIC to improve 308 bps to 22.2 per cent respectively by FY25," it said. 

What others say
Nirmal Bang Securities said Electronics Mart enjoys favorable terms of pricing from brands due to its scale, adding that the company has demonstrated superior performance among all major consumer durable and electronics retailers in India in terms of growth and has also managed to deliver respectable return on equity of 17.4 per cent during the Covid impacted year of FY22. 

"We believe EMI is being offered at attractive valuations at PE of 21.8 times FY22 and EV/Ebitda of 9.7 times. We recommend subscribing to the issue," Nirmal Bang said.

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.
 
"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. In our view, the IPO is priced attractively and we thus recommend a Subscribe," Elara said.