Choice Broking has come out with its report on Avenue Supermarts Ltd. The research firm has recommended to "Subscribe " the IPO in its research report as on March 08 , 2017.
Avenue Supermarts Ltd. (ASL) is an emerging national supermarket value retail chain under the brand name “D-MART”. According to Technopak, in FY16, it was one of the largest and the most profitable F&G retailers in India.
•Part of the net proceeds from the fresh issue will be used to trim the debt of the company, while the rest will be utilized for the construction and purchase of fit outs for the new stores.
Valuation & recommendation:
At the higher price band of Rs. 299 per share, ASL’s share is valued at a P/E multiple of 58.5x (to its restated FY16 EPS of Rs. 5.1), which is at significant discount to its peer average of 482.7x. On P/BVPS and EV/EBITDA front, it is valued at multiple of 12.3x and 29.6x, respectively, as compared to peers average of 6x and 104.3x.
Considering its efficient operating performance, the target market segment, attractive valuation and future growth prospects, we recommend a “SUBSCRIBE” rating for the public issue.
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