HEM Securities 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.
Co is an emerging national supermarket chain, with a focus on value-retailing. According to Technopak, in Fiscal 2016 company was one of the largest and the most profitable F&G retailer in India. Co offer a wide range of products with a focus on the Foods, Non-Foods (FMCG) and General Merchandise & Apparel product categories. For Fiscal 2016, Maharashtra contributed a majority of co's revenue from sales (62.57%) followed by Gujarat (18.83%),Telangana (10.15%), Karnataka
(6.14%) Andhra Pradesh (1.03%), Madhya Pradesh (0.85%) and Chhattisgarh (0.43%). Co operate and manage all its stores. Co operate predominantly on an ownership model (including long-term lease arrangements, where lease period is more than 30 years and the building is owned by co) rather than on a rental model.
Reasons to "Subscribe"
As of January 31, 2017, co had 118 stores with Retail Business Area of 3.59 million sq.ft, located across 45 cities in Maharashtra (59), Gujarat (27), Telangana (13), Karnataka (7), Andhra Pradesh (4), Madhya Pradesh (3), Chhattisgarh (1), NCR (1), Daman (1) and Rajasthan (2). Thus, depicting wide presence of co. Also, co's financial strength looks attractive as co's return ratios are higher than its peers. Co's ROE & ROCE stands at 21% & 19% respectively for FY16 against its peers like Future retail ( ROE 2 %, ROCE 4% for Fy16) & Trent Ltd ( ROE 4 %, ROCE 8% for Fy16).
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