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Mar 08, 2017 05:19 PM IST | Source: Moneycontrol.com

Subscribe to Avenue Supermarts Ltd: Yes securities

Yes 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 07 , 2017.

Subscribe to Avenue Supermarts Ltd: Yes securities
Yes securities research report on Avenue supermarts Ltd

Avenue Supermarts Limited (ASL) is in the retail space, with focus on value retailing
wherein it follows the everyday day low price/ cost pricing model. The company owns and operates the chain of D-Mart supermarkets, which are located in various parts of the country – with most of its stores located in the western and southern regions. As of 31st January 2017, the company had a total of 118 stores located in 45 cities, spread across 9 states and 1 Union Territory. Maharashtra and Gujarat have a lion’s share of the location with 60 stores in the former while 27 stores are located in the latter. The total retail business area as of January 2017 stood at ~3.6 mn sq ft. What makes ASL different from others is its pre-dominantly owner-ship based model, in which the company owns the piece of property (including land) as compared to renting the space. Having said that, the company has also a portion of its stores taken on long term lease.

Valuation:


At the price band of INR 295 – 299 per share, the IPO is priced at a PE of
about 58.5x its consolidated FY16 EPS and about 36.1x its 9MFY17 annualized
profits, which makes it a fairly priced proposition. Having said that, listing gains
cannot be ruled out for this issue given the high goodwill attached to the promoter
group, the ‘D-Mart’ brand and the strong track record. We recommend an APPLY on
this issue.

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