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Mar 08, 2017 05:19 PM IST | Source:

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.

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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.


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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