Mkt cap to be around Rs 380 crore post IPO: V-Mart Retail

New Delhi based multi-brand retail chain V-Mart Retail is set to launch its initial public offer of 57.46 lakh equity shares on February 1, 2013. The issue size in terms of amount would be about Rs 112-123 crore.The price band for the issue, which will close on February 5, has been fixed at Rs 195-215 per share. It is listing on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Lalit Agarwal, CMD, V-Mart Retail told CNBC-TV18 the company plans to raise around Rs 100 crore from the IPO proceeds. V-Mart Retail raises Rs 26.25 cr via pre-IPO placement He further added, the company does not have any long-term debt but only working capital loan of Rs 45 crore. The market cap of the company, at an average pre-IPO placement price of Rs 210 per share would be around Rs 380 crore. Also Read: V-Mart Retail to double presence with IPO proceeds Below is the edited transcript of his interview on CNBC-TV18 Q: If you can start by telling us how much do the promoters own? How much of this, the promoters are selling off? And how much of it is new issue, which will benefit the company? A: The promoters are not selling off any stake. We have private equity player. The promoters had almost 79 percent of the holding before the issue and post the issue it will be 59 percent. The private equity who had more than 33 lakh shares, would be offloading around 17 lakh shares in this issue. Basically, 33 percent would be going to the private equity guys and balance would be coming into the company. Q: You have given us in the Draft Red Herring Prospectus (DRHP) some idea of the performance up until March 2012. I understand that your profits were at Rs 10.5 crore compared to Rs 6.5 crore year ago. Likewise, I understand your total income was Rs 282 crore compared to Rs 215 crore. Can you tell us the 9 months profit? A: As per November 30 balance sheet, we have revenue of Rs 250 crore for 8 months. We have a Profit after tax (PAT) margin of almost Rs 13.1 crore as on November 30 2012, and the earnings before interest, taxes, depreciation, and amortization (EBITDA) is around 11 percent. Q: What is the post issue market cap of the company you are looking at, say at an average pre-IPO placement price of Rs 210 per share? A: Something around Rs 380 crore. Q: On a profit of Rs 15 crore you are asking for about 16 times. Frontline retail stocks are not trading at that kind of valuations. Your investment bankers are confident of you being able to pull this off at these valuations? A: The kind of pricing that we are asking is quite comfortable because retail being very diligent for everybody, it’s a tough fight for everybody and we are seeing multiples of peers growing up to may be 50 or even 250. I don’t want to compare myself with others, but we are very confident of growing these numbers going forward. With the strength of penetration,we had in tier-II and tier-III cities, in our retail store expansion would improve our margins and we would have those numbers which would be more than what it is right now. Q: What is your debt at this point in time, net-net how much is the company making from the public issue and will you retire any debt? A: As of now V-Mart has a debt of only Rs 45 crore which is only a working capital loan. So, we do not have any long-term debt. We do not have debt on our term loans. We only have working capital loan of Rs 45 crore which on an average utilised for 75-80 percent. Company does not have any intention to retire from those debts. It will not raise any more debt in the next two years. Company plans to raise something around Rs 100 crore from these IPO proceeds because we have had pre-IPO round for Rs 26 crore just 12 days back.