Electronics Mart IPO subscribed 3 times on Day 2 so far; GMP rises to Rs 36

The Rs 500-crore Electronics Mart India IPO, which got fully subscribed on Day 1 itself, saw increased investor demand, as the issue attracted 3.11 times subscription by 11.30 am on Day 2 of the bidding process. 

The IPO, which is being sold in Rs 56-59 range, received bids for 19,41,23,818 shares against the issue size of 6,25,00,000 shares, with the quota reserved for retail individual investors (RIIs) getting 4.07 times subscription. 

The non-institutional investors (NII) quota was subscribed 2.76 times while that of qualified institutional buyers (QIBs) attracted 1.68 times bids, NSE data on consolidated bids showed.

Grey market premium

A strong trend in the secondary market, positive analyst recommendations and the ongoing festive season lifted grey market premium of the consumer durables retailer to Rs 36 level from Rs 30-32 level a couple of days ago. 

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

"Despite challenges in terms of stiff competition, Electronics Mart has been delivering strong growth, reflecting efficiency. The asking IPO valuations are deemed attractive and the recent secondary market performance is adding to the sentiment," said Abhay Doshi, co-founder at UnlistedArena.        

The company offers a diversified range of products with focus on large appliances such as air conditioners, televisions, washing machines and refrigerators. As of August 31, out of the total 112 stores it
operated, 11 stores were owned, 93 stores were under long-term lease rental model and eight stores were partly owned and partly leased. 

Subscribe, say analysts

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 Electronics Mart 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.

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.