Buy Electronics Mart; target of Rs 240: LKP Research

LKP Research's research report on Electronics Mart

Electronics Mart (EMIL) had a descent Q4 in the backdrop of good summer season. The company achieved a 15% YoY revenue growth in aQ4FY24 and FY24 while the SSSG stood at 7.3% and 8.4% in Q4FY24 and FY24 with sales mix for mobiles/Large Appliances/Small Appliances at 42%/45%/13% for FY24. The EBITDA also demonstrated 18% and 33% growth with EBITDA margins improving to 7.1% and 7.2% in Q4FY24 and FY24 respectively. The company also reported a 12%/ 50% YoY increase in PAT for Q4FY24 and FY24 respectively. EMIL focused on expanding its store network, adding 33 new MBOs and 1 new EBO in FY24, with a total of 160 stores. The company’s sales mix was dominated by large appliances and mobiles, and it faced initial challenges in new store productivity due to recent openings. Looking ahead, EMIL aims to open 30+ new stores in FY25 and achieve a SSSG target of 9-10% for existing stores while sustaining similar margin levels for FY25.

Outlook

The company valuations have been reasonable compared to competition and we maintain BUY on the stock with revised PT of ₹240.