V-Mart Retail IPO – Review

V-Mart Retail IPO (Initial Public Offering)V-Mart Retail IPO – Review

There are flood of IPO’s coming from the companies based out of Delhi. Last week, it was Esteem Bio Organic Food IPO, now it is the turn of V-Mart Retail IPO.

Delhi based V-Mart Retail has come out for public issue for Rs 57.46 Lacs of shares @ at a price band of Rs 195 to Rs 215. It contains of 40.11 Lacs the fresh issue and offer for sale 17.35 lakhs by Naman Finance and Investment Pvt Ltd.

About V-Mart Retail IPO

V-Mart Retail is a Delhi based multi brand retail chain. It has opened its first store in Ahmadabad on 2003. Currently V-Mart has 62 stores across 54 cities. It operates in Tier-II and Tier-III cities and has chain of “Value retail” departmental stores, general merchandize, apparels, kirana  goods etc. Its operations span across northern, eastern and western parts of India.  It sources the material directly from small manufacturers.

The CMD is Lalit Agarwal. V-Mart runs loyalty programs and claims to have 18.5 lakhs loyal customers and provides gifts and special schemes based on their purchases. Its current employees are 2,200 and planning to extend its strength by another 2,000 as part of expansion plan.

Current issue to public

  • Issue price: Rs 195 to Rs 215 per share
  • Minimum bid: 66 shares and in multiples of 66 shares thereafter
  • IPO opens: 1-Feb-2013
  • IPO closes: 5-Feb-2013
  • Leader managers: Anand Rathi Advisors Ltd
  • Registrar: Karvy Computershare Pvt Ltd
  • Listing: BSE/NSE

Purpose of the IPO: The funds would be used for the following purposes.

  • Opening up of 60 new retail chain stores
  • Expansion of distribution centers
  • Working capital requirements
  • General corporate expenses

What are its financials?

(in Rs. Million)

                                      31-Mar-12  31-Mar-11  31-Mar-10  31-Mar-09  31-Mar-08

Total Income                   2,819.54    2,147.98    1,441.56    1,423.57    980.71

Profit After Tax (PAT)     106.12          62.65           23.26        10.46     35.24

V-Mart Retail revenues has grown from Rs 980 Mn in 2008 to Rs 2,819 Mn in 2012. Its profits have grown from Rs 35.24 Mn in 2008 to Rs 106.12 Mn in 2012 which shows CAGR rate of 31.7%.  Its EPS was Rs 1.79 in 2008 Vs Rs 7.61 in 2012.

Recommendation:  Company is posting good results year on year. With its current issue, the equity would increase by Rs 18 Crores (approx) which brings the P/E ratio to Rs 26.8 to Rs 29.5 (based on upper band and lower band of issue price). P/E of its peers is ranging between Rs 50 to Rs 230. This means the issue is priced on the higher side. Care has assigned the IPO Grade-3 to this offer (One a scale of 5 to 1 where 5 refers good and 1 refers bad) which means “Average fundamentals”.  Investors can wait and watch before investing in such IPO.

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V-Mart Retail IPO – Review

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