Electronics Mart India IPO - 7 Things to Know

Electronics Mart India IPO - 7 Things to Know

by 5paisa Research Team Last Updated: 2022-02-15T16:31:44+05:30

Electronics Mart India Ltd, is one of the leading electronic and white goods retailers headquartered out of Hyderabad. The Electronics Mart India IPO will entirely be a fresh issue of shares with no OFS component. Its retail outlets sell products under the brand name of Bajaj Electronics.

7 Important Things to Know About Electronics Mart India IPO

1) Electronics Mart India Ltd has filed draft red herring prospectus (DRHP) for a Rs.500 crore IPO with SEBI which comprises entirely of a fresh issue of Rs.500 crore. There will be no offer for sale component in the IPO so the entire IPO will result in fresh funds coming into the company and would also be EPS dilutive.

The DRHP was filed by Electronics Mart India Ltd in September 2021 and SEBI has already given approval in November 2021. However, the company is yet to announce the date of its IPO.

2) Out of the total fund raising of Rs.500 crore, Electronics Mart India Ltd plans to allocate Rs.134 crore towards capital expenditure for expansion and Rs.200 crore for its routine working capital requirements.

It also proposes to use a small portion of Rs.50 crore for repayment and prepayment of debt so as to reduce its financial leverage and improve the solvency ratios of the company.

3) Electronics Mart India Ltd was founded by Pavan Kumar Bajaj and Karan Bajaj with an electronics store under the brand name of Bajaj Electronics in Hyderabad in the state of Telangana in the year 1980. Currently, Electronics Mart India Ltd boasts of over 1 crore customers across its outlets with over 7.5 lakh SFT of space in aggregate and spread across over 99 stores.

It also has a Kitchen Stories sub-brand that purely caters to kitchen appliances. Currently, it is also in the process of setting up another niche brand store under the nomenclature of Audio & Beyond, to cater purely to audio equipment.

4) Currently, Electronics Mart India Ltd focuses on retailing large appliances like air conditioners, television sets, washing machines, refrigerators, etc. It also retails high value products like mobile phones and IT peripherals across more than 70 consumer durables and electronics brands.

Currently, Electronics Mart India Ltd displays more than 6000 SKUs (stock keeping units) across its various retail outlets. Currently, its presence is predominantly focussed in the states of Telangana and Andhra Pradesh but plans to expand to the highly lucrative NCR region in the near future.

5) The retailing business is generally a high top line and low profit margin business. For FY21, it reported total revenues of Rs.3,207 crore and net profits of Rs.58.62 core. This implies net margins of around 1.83%.

On a YoY basis, the revenues were higher on better offtake with the gradual lifting of COVID sanctions and opening up of stores. However, the net profits during this period were lower due to higher impact on procurement costs, higher logistics costs and hence lower profits spreads.

6) In terms of peer group comparison, its per store sales of Rs.32 crore compares favourably with most of the other players in the peer group and is at par with that of Croma, which is part of the Tata group.

The company also has 7 large warehouses for stocking which allows them much greater control over the entire logistics management process. Most of the warehouses are strategically located and also connected via an IT backbone network for real time updates on stocks and movement of goods. 

7) The IPO of Electronics Mart India Ltd will be lead managed by IIFL Securities, Anand Rathi Advisors and JM Financial. They will act as the book running lead managers or BRLMs to the issue. 

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