About the company
Incorporated in 2002, Avenue Supermarts Limited is Mumbai based supermarket chain DMart. It is among the largest and the most profitable F&G retailer in India. The company offers a wide range of products with a focus on the Foods, Non-Foods (FMCG) and General Merchandise & Apparel product categories.The Company has 112 stores located across 41 cities in India. It operates and manages all its stores. It also operates distribution centres and packing centres, which form the backbone of the supply chain to support its retail store network. Moreover, the company has 21 distribution centres and six packing centres in Maharashtra, Gujarat, Telangana and Karnataka.
Considering the P/E valuation on the upper end of the price band of Rs. 299, the stock is priced at pre issue P/E of 32.05x on its FY17 EPS of Rs. 9.33. Post issue, the stock is priced at a P/E of 35.62x on its EPS of Rs. 8.39. Looking at the P/B ratio at Rs. 299 the stock is priced at P/B ratio of 8.81x on the pre issue book value of Rs.33.93 and on the post issue book value of Rs. 62.59 the P/B comes out to 4.78x.
On the lower end of the price band of Rs.295 the stock is priced at pre issue P/E of 31.62x on its FY17 EPS of Rs. 9.33.Post issue, the stock is priced at a P/E of 35.14x on its EPS of Rs. 8.39. Looking at the P/B ratio at Rs. 295, the stock is priced at P/B ratio of 8.69x on the pre issue book value of Rs. 33.93 and on the post issue book value of Rs. 62.59 , the P/B comes out to 4.71x.
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The fundamental of the company looks good. The revenue of the company grew at 40% CAGR in the last 5 years, which indicates strong growth in the revenues. Moreover strong brand makes this IPO unique in the industry. However, if the company promptly fails to identify and respond to changing customer preferences or evolving trends, this may decrease the demand for its products among its customers and this may adversely affect its business.