The Bajaj Family founded the Company to start the Retail business of Consumer Electronics Durables. The Company now has become one of the fastest-growing electronics chains and retail consumer companies. It has a client base of one crore customers with 99 retail stores spread over 9,50,000 square feet area. The Company has a strong base in Andhra Pradesh and Telangana. On growth upfront, it is setting up its network in NCR and other Metro Cities of the Country. In this article, we take a closer look at the Electronics Mart IPO Review and its possible future prospects.
It Is India’s fourth-largest electronics store operating in the durable consumer segment. The Company has a diversified product portfolio. The Company’s emphasis is majorly on the big electronics such as air conditioners, washing machines, televisions and refrigerators. It is also engaged in mobile phones and other small electronics items.
The Company’s business model is a hybrid model. It includes a mix of ownership and leases rental. It helps them to focus on their retail sites for better customer visibility, access and support system. The Company is on the path of growth as even in the COVID-19 pandemic, it expanded its retail store network. The Company added 22 new retail stores in FY21.
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the loans of the Company, which be availed on a consolidated basis.
- To meet corporate targets.
- To fund the working capital requirement.
BASIS OF THE ELECTRONICS MART IPO OFFER:
- Electronics Mart India Limited is India’s fourth-largest electronics store. The Company has a strong market share and established position in Southern India.
- The Company has a significant market capitalization. Based on its size and long-term associations with top consumer brands, the Company can display items at reasonable prices.
- The Company is a strong growing company. It is diversifying its product and service platform portfolio. The Company is also improving in front of profitability and business operations.
- The Company operates on a cluster-based expansion model. It promotes the Company’s geographic expansion.
- The Company has operational flexibility due to their working model. It helps them to attain a long-term sustainable footprint.
ELECTRONICS MART IPO DETAILS:
Electronics Mart India Limited company has its headquarters in Thane, Mumbai. The Company submitted its DRHP to SEBI. The Company is currently waiting for approval from SEBI to float its IPO in the Indian Equity Market. As per the DRHP, the IPO will have two parts. An OFS of 6,070,675 equity share by the promoters and issue of fresh equity worth Rs.300 crores. The Company also mentioned that it would carry out a Pre IPO-Placement of Rs. 60 crores. Check Day by Day IPO Subscription Details (Live Status)
| IPO Opening Date | December 2021 (expected) |
| IPO Closing Date | December 2021(expected) |
| Issue Type | Book Building Type |
| Face Value | Rs.10/ Equity share |
| IPO Price | |
| Market Lot | |
| Min Order Quantity | |
| Listing At | BSE, NSE |
| Issue Size | |
| Fresh Issue | Rs. 300 Crore |
| Offer for Sale | 6,070,675 Equity shares |
| Basis of Allotment Date | December 2021 (expected) |
| Initiation of Refunds | December 2021 (expected) |
| The Credit of Shares to Demat Account | December 2021 (expected) |
| IPO Listing Date | December 2021 (expected) |
| Basis of Allotment Type | % Of the IPO Offer |
| Qualified Institutional Buyer | 50 |
| Non-Institutional Investor | 15 |
| Retail | 35 |
STRENGTHS AND GROWTH PARAMETERS OF ELECTRONICS MART IPO:
- The Company has a solid regional presence with support from strong brands in their outlets.
- The Company has a major business operational model in Andhra Pradesh and Telangana. The Company offers 6,000 high-end electronics consumer products. The product portfolio includes home appliances, mobile phones, telephones, Laptops, PCs and a new range of electronics at competitive prices.
- From the 95 stores been operated by the Company, 84 stores are multi-brand outlets. These are dedicated outlets for the reputed and high-value brands such Apple, Samsung, LG, Voltas and many others.
- The Company has a total of 1 million square feet of retail space under their business operations.
- The Company has also digitalized its business operation by launching its website and its products on e-commerce platforms such as Flipkart, Indiamart, Amazon, etc. It contributes to their revenue and financial parameters.
- The Company has a Strong and Experienced Promoter. It is a privately held company only by the promoters of the Company. The promoter of the Company is the Bajaj family. They have experience of 35 years in the consumer retailing business.
- The promoter and the management team has been able to implement their strategies and execution of the plan efficiently. The Company started its operation from one store to currently 95 stores from 1983 to 2021. The Company has also enhanced their customer support system over the years.
- The Company has a Robust Revenue Growth forecast. It is likely to advance with the Geographical Diversification profile of the Company.
- The Company’s revenue grew with a CAGR of 12.7% in the period of FY17-FY21. The revenue growth is backed by the factor of healthy store expansion carried out by the Company and a competitive pricing model.
- In the theme of unlocking, in the first quarter of FY21, the Company’s operating performance was resilient in revenue and EBITDA despite the pandemic disruptions.
- The Company is expected to attain a higher recovery in the business operation amid the unlock theme, economic stabilization, and strong festive demand. It has led to an increased footfall in their showrooms.
- The Company also expects additional revenue growth upfront from newly opened showrooms and the showrooms in new geographical areas. It will expand the brand presence of the Company in the country.
- The Company has a long-term association with the electronics and consumer durable company to sell their product in their retail stores. As a result, the Company does the purchases these products from the Original Equipment Manufacturers.
- The Company has a dedicated research team to determine the study regarding the customers’ needs and new trending electronics.
- The Company is highly focused on HRD. It carries out training of their employees in skill enhancement, boosting productivity, improvement in service standards, building loyalty and many more.
- The Company registered strong credit metrics in which the interest coverage was expressed as EBITDA/gross interest expense was 3.6 times. It was due to the debt-based CAPEX Plan and Higher Inventory Days in their new showrooms.
WEAKNESS AND THREATS OF ELECTRONICS MART IPO:
- The Company is highly subjected to the vulnerability of the pricing and obsolescence risk.
- COVID-19 has impacted the Operational Performance of the Company. The Company registered a significant decrease in their EBITDA margins. The pandemic has also altered the consumer spending pattern, which has hampered the operating margins and business of the Company.
- The Company registered a negative free cash flow in FY20. It was due to a debt-based CAPEX plan, orders placed through online platforms and High Inventory Costs.
- The Company registered an interest coverage of 2.4 times. It includes the impact of COVID-19. The Company estimates to have a decline in the same in FY21. It is due to the low EBITDA margins of the Company. These margins are supposed to stay low to boost sales through heavy discounts and high fixed costs of the finished product.
- The Company needs to perceive and react to changing customer inclinations or advancing patterns without really wasting any time to maintain efficiency.
- The Company’s office, retail stores and warehouses are leasehold properties.
- The Company need to carry out the proper marketing and sales strategy to improve brand awareness.
- The Company is engaged in the business of highly Competitive Industry. The Company faces competition from well-established firms and other smaller unorganized players.
- The Company heavily relies on sales from its stores. Online sales only contribute a very small amount of their revenue. The growth of the E-Commerce Electronics Retail is a potential threat to the Company if the Company stays focused on its Retail Store.
- The Company has a term debt of Rs.84 million which will mature in FY22.
- The Company’s major revenue is from Telangana and Andhra Pradesh. The Company needs to focus on improvement upfront in geographical expansion.
- The Company is in the retail segment; they don’t own the Company’s product.
FINANCIAL PARAMETERS OF ELECTRONICS MART IPO:
| Particulars | For the year/period ended (in Cr.) | ||||
| 31-Mar-21 | 31-Mar-20 | 31-Mar-19 | |||
| Total Assets | 1,523.53 | 1,347.60 | 1,109.15 | ||
| Total Revenue | 3,207.37 | 3,179.02 | 2,826.10 | ||
| Profit After Tax | 58.62 | 81.61 | 77.10 |
| PARAMETER | MARCH 21 | MARCH 20 | YoY % |
| Core EBITDA Margin (%) | 6.37 | 7.18 | -11.26 |
| EBIT Margin (%) | 4.72 | 5.53 | -14.64 |
| Pre-Tax Margin (%) | 2.48 | 3.54 | -29.73 |
| PAT Margin (%) | 1.83 | 2.57 | -28.83 |
| Cash Profit Margin (%) | 3.65 | 4.17 | -12.60 |
| ROA (%) | 4.11 | 6.69 | -38.52 |
| ROE (%) | 12.67 | 21.10 | -39.93 |
| ROCE (%) | 14.93 | 20.69 | -27.85 |
| Receivable days | 10.26 | 9.72 | 5.56 |
| Inventory Days | 50.34 | 41.97 | 19.94 |
| Payable days | 0.83 | 2.57 | -67.50 |
| Net Sales Growth (%) | 0.93 | 12.35 | -92.50 |
| Core EBITDA Growth (%) | -10.59 | 7.20 | -247.05 |
| EBIT Growth (%) | -13.85 | -0.33 | -4121.12 |
| PAT Growth (%) | -28.17 | 5.85 | -581.30 |
| EPS Growth (%) | -28.17 | 5.85 | -581.30 |
PROMOTERS:
The promoters of the company are:
- Pavan Kumar Bajaj
- Karan Bajaj
| Pre-Issue Share Holding | 99.98% |
| Post Issue Share Holding |
CONTACT DETAILS:
Electronics Mart India Limited
D. No: 6-1-91, Shop No. 10, Ground Floor,
Next to Telephone Bhavan, Secretariat Road, Saifabad,
Hyderabad – 500 004, Telangana, India
Tel: +91 40-2324 2512
E-mail: cs@bajajelectronics.in
Website: www.electronicsmartindia.com
REGISTRAR:
KFin Technologies Private Limited
Selenium Tower-B, Plot 31 & 32,
Gachibowli, Financial District, Nanakramguda,
Serilingampally, Hyderabad – 500 032
Telangana, India
Tel: +91 40 6716 2222
E-mail: emi.ipo@kfintech.co
Website: www.kfintech.com
LEAD MANAGER(S):
- Anand Rathi Advisors Limited
- IIFL Securities Limited
- JM Financial Limited
