7 Things about Electronics Mart IPO

Electronics Mart India Ltd, which had already announced the dates of its proposed IPO, has also now announced the price band for the IPO. Electronics Mart India Ltd is one of the largest electronics and home equipment retailers in south India and is predominantly sold under the brand name of Bajaj Electronics. Here are some key things you must know about the Electronics Mart India IPO.

7 Things to know about Electronics Mart IPO

The electronics retailer plans to open its IPO next week in a total fresh issue of funds. Here are some key points to know.

1) Electronics Mart India Ltd was set up in the year 1990 by Pavan Bajaj and Karan Bajaj and is already the fourth largest retailer of electronics and consumer durables in India. It offers the complete platter of consumer products like air conditioners, televisions, washing machines, microwave ovens, refrigerators etc. It stacks over 6000 stock keeping units (SKUs) across consumer durables and electronics spread across more than 70 brands; both Indian and foreign.

2) The IPO opens for subscription on 04th October and closes for subscription on 07th October; both days inclusive. The basis of allotment of the IPO will be finalized on 12th October while the refunds for the non-allottees would be initiated on 13th October. The demat credits to the allottees would be completed by 14th October and the stock would be listed on the NSE and the BSE on 14th October. 

3) The stock of Electronics Mart India Ltd has a face value of Rs10 and the price band for the IPO has been fixed in the range of Rs56 to Rs59. The entire issue would be in the form of a fresh of shares aggregating to Rs500 crore. The allocation to QIBs is 50%, allocation to retail investors is 35% while the HNIs / non-institutional investors will have an allocation of 15%. Post the public issue, the stake of the promoters in Electronics Mart India Ltd will come down from the current 100% to 77.97%.

4) The minimum lot size for application is 254 shares. Thus retail shares can apply for minimum 1 lot of 254 shares and up to a maximum of 13 lots comprising of 3,302 shares. The maximum amount that the retail investors can apply for would be Rs194,818. The small HNIs (S-HNI) can apply for a minimum of 14 lots comprising of 3,556 shares and a maximum of 66 lots comprising of 16,764 shares. The Large HNIs (B-HNIs) can apply for a minimum of 67 lots comprising of 17,018 shares with no upper limit for investment applicable for them.

5) The IPO being entirely a fresh issue would enhance the share capital of the company and hence it would be EPS dilutive for the shareholders. The fresh issue proceeds of Rs500 crore (net of issue expenses) would be predominantly applied towards capex for expansion and the opening of new stores and warehouses. Part of the funds raised would also be utilized for repayment or for prepayment of loans as well as for working capital purposes and other general corporate purposes. There is no offer for sale component in this IPO.

6) As of August 2022, Electronics Mart India Ltd has a total of 112 stores spread across 36 cities with a predominant presence in the southern region of India. Apart from its generic brand of Bajaj Electronics used to market all products, the company has also created two niche retail brands. It has specialised stores under the name “Kitchen Stories” which cater to kitchen specific-requirements. In addition, there is also a specialized store format called “Audio & Beyond” which is focused on high-end home audio and home automation solutions and products.

7) Finally, let us come to the financials of Electronics Mart India Ltd. For the fiscal year ending FY22, Electronics Mart India Ltd reported 35.8% growth in their revenue from operations at Rs4,349 crore. For FY22, the company also reported a 77.2% yoy increase in the net profits at Rs103.89 crore. Of course, the net margins at 2.39% may be low, but that is generally the nature of the retail business.

Electronics Mart India Ltd has appointed IIFL Securities, JM Financial Consultants and Anand Rathi Securities as the book running lead managers (BRLMs) to the issue. KFIN Technologies Ltd (formerly Karvy Computershare Ltd) will be the registrars to the IPO.

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