Review By Dilip Davda on January 24, 2013
V Mart is one of the pioneers in setting up stores across various small Indian towns and cities including Sultanpur, Ujjain, Motihari It primarily operate in Tier-II and Tier-III cities, with a chain of 'value retail' departmental stores offering apparels, general merchandise and kirana, catering to the entire family. VMRL has a base in New Delhi, and its operations are spread across northern, western and eastern parts of India. In October, 2003 it opened our first store by the name of 'V-Mart' at Ahmedabad, Gujarat, and currently own and operate 62 stores spread across 53 cities and 10 states and union territories, with a total area of 5.06 lac Sq. Ft. Its stores are located in New Delhi, Gujarat, Uttar Pradesh, Bihar, Punjab, Chandigarh, Haryana, Jammu and Kashmir, Rajasthan and Madhya Pradesh.
VMRL has established stores in Metro, Tier-I, Tier-II and Tier-III cities which are primarily located as standalone stores in high-street areas and shopping hubs of such cities. The average size of store is approximately 8,000 Sq. Ft. The company follows the concept of 'value retailing‟ to target the strata of the population belonging to the expanding 'aspiring class‟ and 'middle class‟ and is based on customer's socio-economic conditions, purchasing power, demographic details and customer trends. Its offerings in untapped markets provide customers with a different shopping experience, comprising of a vast range of value retail products under a modern ambience and feel of a large retail mall.
Its business is classified in three business verticals: (i) Apparels, (ii) General Merchandise, and (iii) Kirana Bazaar. Its 39 stores are 'Mini Hyper Stores' retailing apparels, general merchandise as well as kirana and 23 stores are 'Family Fashion Stores' which are focused on apparels and general merchandise. Now the company mulls opening of new 60 stores and to part finance this, it is offering 5746000 equity share of Rs. 10 each within a price band of Rs. 195-215 under book building process. The issue includes issue of 4011000 fresh equity shares and 1735000 equity shares as offer for sale by existing investors. The company has done pre-IPO placement of 1250000 equity share on 6th January 2013 at a price of Rs. 210. Thus the net offer size is 4496000 equity shares. Issue opens on 01.02.2013 and will close on 05.02.2013. Minimum application is to be made for 66 shares and in multiples thereof thereafter. The company hopes to mobilize Rs. 112.05 crore to Rs. 123.54 crore based on lower and upper band of the issue price. As for BRLM's mandate, out of 14 issues only 7 issues gave listing gains.
Issue consists 32% of fully diluted equity post issue. It is lead managed by Anand Rathi Advisors Ltd. and Karvy Computershare Pvt Ltd is the registrar to the issue. CARE has assigned IPO Grade 3 to this offer which indicates average fundamentals of the company. Before this it has issued two bonus issues 4 for 1 in February 2008 and 9 for 10 in June 2012.
On company's performance front, for last three years it has posted an average EPS (Earning per share) of Rs. 5.84 and for first eight months of current fiscal it has earned Rs. 8.61 per share on equity post pre-IPO placement. Its NAV stands at Rs. 61.83 as on 06.01.13. After this issue, its equity will increase to Rs. 17.96 crore and if we attribute these earnings then EPS stands at Rs. 7.28 that brings asking price at a P/E (Price Earnings) of 26.8 to 29.5 based on lower and upper price band and around 3.2 P/BV (Price to book value). Its peers are trading around 56 to 230 P/E thus the issue is priced reasonably. Investment is recommended in this IPO, considering retail play post FDI in multi brand in place.
Review By Dilip Davda on January 24, 2013
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of V-Mart Retail Ltd. offers an early investment opportunity in V-Mart Retail Ltd.. A stock market investor can buy V-Mart Retail IPO shares by applying in IPO before V-Mart Retail Ltd. shares get listed at the stock exchanges. An investor could invest in V-Mart Retail IPO for short term listing gain or a long term.
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V-Mart Retail IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the V-Mart Retail IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is V-Mart Retail IPO?"
Our recommendation for V-Mart Retail IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the V-Mart Retail IPO.
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