Electronics Mart India IPO Details – Do you invest?

Electronics Mart India IPO

Electronics Mart India IPO – Company Overview

Electronics Mart India IPO – The company filed Red Herring Documents (RHP) on September 23, 2022.  Electronics Mart India is coming up with an IPO of a fresh issue of INR 500 crores with a face value of INR 10 for each equity share.

The company was incorporated as ‘M/s Bajaj Electronics” in Hyderabad in 1980. To become the public company before IPO, the name changed to “Electronics Mart India Limited”. The registered and corporate office is in Saifabad, Hyderabad – 500 004, Telangana, India.

  • Electronics Mart India is 4th largest and one of the fastest growing consumer durables and electronics retailers in India.
  • In terms of revenue, the company is the largest regional organized player in the southern region.
  • The company has a strong dominant presence in the states of Telangana and Andhra Pradesh with over 3 decades of experience.
  • Electronics Mart India’s offer includes more than 6,000 SKUs across product categories from more than 70 consumer durable and electronic brands.
  • The company operates 112 stores as of August 31, 2022, 11 stores are owned, 93 stores are under the long-term lease rental model and eight stores are partly owned and partly leased.
  • Electronics Mart India is present in 14 cities in Andhra Pradesh, 20 cities in Telangana, and two cities in the NCR region.
  • The company operates in all three channels retail, wholesale, and e-commerce.

Electronics Mart India Products / Services

  • The company sells various products under the broad categories under the brand name of “Bajaj Electronics” in Andhra and Telangana, and “Electronics Mart” in the NCR region.
    • Large appliances include air conditioners, televisions, washing machines, and refrigerators
    • Mobiles and small appliances, IT and others.
  • The company also caters to kitchen appliances under the name “Kitchen Stories”.

Electronics Mart India IPO – Company Founders and Leadership team

  • MR. Pavan Kumar Bajaj is the promoter, Chairman & Managing Director of the company. He has over 40 years of experience in retail business management.
  • MR. Karan Bajaj is the promoter, Chief Executive Officer, and Whole-time Director of the company. He has over 10 years of experience in retail business management.
  • Promoters are related to each other.

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Electronics Mart India Revenue and profits

The total income of the company has been growing over the years. The company’s revenue from operation was INR 43,493.16 million in FY 2022 as against INR 32,018.76 million in FY 2021 which is about 36% growth during the period. The company incurred a profit after tax of INR 1,038.91 million in FY 2022 which is a growth of 77% over the previous year FY 2021.

Electronics Mart India IPO – Valuation Parameters

Electronics Mart India earn INR 100 crores profit in FY 2022. Though the Net cash flow from operating activities has increased over the years, debt-to-equity ratio and EPS does not attract me to invest in Electronics Mart IPO. Refer to the table below for more financial details.

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Electronics Mart IPO – Financial Parameters

All amounts in INR Million except percentages
(Year ended March 31)
Revenue from Operations31,724.77 32,018.7643,493.16
Total Income31,790.1732,073.6843,530.71
Profit After Tax for the Year816.08 586.211,038.91
EBITDA Margin (%)7.18 6.376.71
Return on Equity (%)18.84 11.9217.42
Return on Capital Employed (%)28.2814.3518.87
Net Debt / Equity1.21.111.0
Earnings Per Share-Diluted (in INR)2.721.953.46
Net Cash from Operating Activities787.66840.851,591.82

Electronics Mart IPO date and price

Electronics Mart IPO is opened today on 4th October and will close on 7th October. The price band of the IPO is Rs. 56 to Rs. 59 per equity share. Total size of the Electronics Mart IPO is Rs 500 Crore. Investors will bid for a minimum of 254 equity shares and in multiple of this. One lot will cost Rs. 14986 at the upper band of Rs. 59. There is no offer for sale (OFS) available in this IPO.

Objectives of the Electronics Mart IPO Net proceeds:

  • The company is planning to fund INR 1,114.41 million to expand its operation while opening stores and warehouses.
  • INR 2,200.00 million will be allocated to fund incremental working capital requirements.
  • Electronics Mart India is planning to repay/prepay, in full or part of its borrowings with INR 550 million.
  • The rest of the net proceeds from Electronics Mart India IPO will be utilized for General Corporate Purposes.

Electronics Mart IPO: Do you invest? 5 factors to know

  • Electronics Mart India is present only in two states in India and does not have a PAN India presence.
  • The competition is huge in the Electronics retail segment with a low margin. Big players such as Amazon, Reliance, and other such stores are available both online and offline.
  • Big players such as above can give big discounts to dominate the small players which will affect the revenue of Electronics Mart India.
  • Global growth is expected to slow due to higher interest rates and India’s growth rate in the electronics market will also be affected by that.
  • Though sales of the smartphone will go up in the Indian market due to the launch of 5G, urbanization, and the young population, the company may not be able to capture the market share as expected due to its limited presence.
  • The business is highly seasonal with several mum-n-shop players present in the market.
  • Hence, I will not be an investor in this company as a long-term investor. However, one can invest for short term gain.

Electronics Mart IPO GMP

Grey market premium or GMP is a premium amount that an investor is ready to pay/ paid to the share of a company before it becomes public. This is the rate at which initial public offering (IPO) shares are traded before they are listed on the stock exchanges. However, this is not the preferred method to judge the fundamentals of a company. Some penny stocks traded at high GMP but some of them are not strong fundamentally. Hence, always understand the fundamentals of a company before investing in the IPO of that company. It is our effort to analyze the fundamental parameters before you to help you understand the company.