Electronics Mart India Limited
Please refer to important disclosures at the end of this report
1
Incorporated in 1980, Electronics Mart India Limited (EMIL) is the 4th largest
consumer durable and electronics retailer in India. The company offers a
diversified range of products with a focus on large appliances (air conditioners,
televisions, washing machines and refrigerators), mobiles and small
appliances, IT and others. The company's offering includes more than 6,000
SKUs (stock keeping units) across product categories from more than 70
consumer durable and electronic brands.
Positives: (a) 4th largest consumer durable and electronics retailer in India with a
leadership position in South India (b) Consistent track record of growth and industry
leading profitability (c) Increasing market presence and geographic reach with
cluster-based expansion
Investment concerns: (a) High geographic concentration risk (b) High competition
from online retailers (c) High dependence on limited number of brands
Outlook & Valuation: In terms of valuations, the post-issue P/E works out to 21.8x
FY22 EPS (at the upper end of the issue price band) which is low compared to its
peer Aditya Vision Ltd. Further, EMIL has better revenue growth (CAGR of 17%) over
2 years, better return on equity and expansion plan on the cards. Considering all the
positive factors, we believe this valuation is at reasonable levels. Thus, we
recommend a SUBSCRIBE rating on the issue.
Key Financials
Y/E March (₹ cr)
FY’20
FY'21
FY'22
Net Sales
3,172
3,202
4,349
% chg
-1%
51%
Net Profit
82
59
104
% chg
-28%
77%
EBITDA (%)
7.2
6.4
6.7
EPS (Rs)
2.1
1.5
2.7
P/E (x)
27.8
38.7
21.8
P/BV (x)
5.2
4.6
3.8
ROE (%)
20.7
11.9
17.4
ROCE (%)
13.6
10.0
12.7
EV/Sales
1.0
1.0
0.8
Source: Company RHP, Angel Research
SUBSCRIBE
Issue Open: October 04, 2022
Issue Close: October 07, 2022
Offer for Sale: ` 0cr
QIBs 50% of issue
Non-Institutional 15% of issue
Retail 35% of issue
Promoters 78.0%
Public 22.0%
Fresh issue: `500cr
Issue Details
Face Value: `10
Present Eq. Paid up Capital: ` 300cr
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: ` 385cr
Issue size (amount): ₹ 500cr
Price Band: ₹56- ₹59
Lot Size: 254 shares and in multiple thereafter
Post-issue mkt. cap: * `2,180cr - ** `2,270cr
Promoters holding Pre-Issue: 99.99%
Promoters holding Post-Issue: 0.00%
*Calculated on lower price band
** Calculated on upper price band
Book Building
IPO NOTE
Electronics Mart India Limited
October 3, 2022
Electronics Mart India Ltd | IPO Note
October 3, 2022
2
Company background
Incorporated in 1980, Electronics Mart India Limited (EMIL) is the 4th largest
consumer durable and electronics retailer in India. EMIL is also the largest regional
organized player in the southern region in revenue terms with dominance in the
states of Telangana and Andhra Pradesh. The company offers a diversified range of
products with a focus on large appliances (air conditioners, televisions, washing
machines and refrigerators), mobiles and small appliances, IT and others. The
company's offering includes more than 6,000 SKUs (stock keeping units) across
product categories from more than 70 consumer durable and electronic brands.
EMIL’s business model is a mix of ownership and Lease rental model, as it focuses
to secure retail paces which ensures high visibility and easy accessibility to
customers. Under the ownership model, EMIL owns the underlying property
including the land and building and in lease rental model, it enters a long-term
lease arrangement. As of August 31, 2022, out of the total 112 stores it operates,
11 stores are owned, 93 stores are under long-term lease rental model and eight
stores are partly owned and partly leased.
Company operates its business activities across three channels of retail, wholesale,
and e-commerce:
1) Retail: Company has set up diverse consumer durable and electronic retail
stores arraying multifarious as well as specialized electronic products. As
of August 31, 2022, out of 112 stores, 100 stores are Multi Brand Outlets
(“MBOs”), and 12 stores are Exclusive Brand Outlets (“EBOs”). The revenue
from retail channel was ₹ 1,276.7cr, ₹ 3,958.1cr, ₹ 2,931.3cr and ₹ 2,899.1cr
which represented 90.65%, 91.01%, 91.55% and 91.38%, of the revenue
from operations, respectively, for the three-month period ended June 30,
2022, FY2022, FY2021 and FY2020, respectively.
2) Wholesale: Company supplies products to single shop retailers in Andhra
Pradesh and Telangana regions. The revenue from wholesale channel was
₹ 20.2cr, ₹ 64.2cr, ₹ 53.1cr and ₹ 50.5cr which represented 1.44%, 1.48%,
1.66% and 1.59% of the revenue from operations, respectively for the
three-month period ended June 30, 2022, FY2022, FY2021 and FY2020,
respectively.
3) E-Commerce: In 2017, EMIL diversified its operations by venturing into the
e-commerce space through its website. Company’s e-commerce website
currently functions as a catalogue for the products it retails at its stores.
Company further expanded its e-commerce operations in 2019 by
associating with the largest domestic and international players of the e-
commerce market thereby expanding its business reach from brick-and-
mortar retail stores to e-commerce platforms.
Electronics Mart India Ltd | IPO Note
October 3, 2022
3
Issue details
The IPO is made up of Fresh issue of ₹500cr making the total Issue size of ₹500cr.
Pre & Post Shareholding
(Pre-Issue)
(Post-Issue)
Particulars
No of shares
%
No of shares
%
Promoter
29,99,89,713
99.99%
29,99,89,713
77.97%
Public
13,287
0.00%
8,47,59,050
22.03%
Total
30,00,03,000
100.00%
38,47,48,763
100.00%
Source: Company, Angel Research
Objectives of the Offer
◼ Rs 500cr proceeds from the fresh issue would be utilized as follows:
o Up to ₹220cr utilized for funding incremental working capital
requirements.
o Up to ₹111.4cr utilized for funding capital expenditure for
expansion and opening of stores and warehouses.
o ~₹55cr to be utilized for repayment / prepayment, in full or
part, of all or certain borrowings availed by the Company.
o Rest would be utilized for general corporate purposes
Electronics Mart India Ltd | IPO Note
October 3, 2022
4
Financial Summary
Income Statement (Consolidated)
Y/E March (₹ cr)
FY’20
FY’21
FY’22
Net Sales
3,172
3,202
4,349
% chg
1%
36%
Total Expenditure
2,945
2,998
4,057
Raw Material
2,702
2,767
3,755
Personnel
59
61
79
Other Expenses
184
169
223
EBITDA
228
204
292
% chg
-10%
43%
(% of Net Sales)
7.2
6.4
6.7
Depreciation & Amortization
51
58
71
EBIT
177
146
221
% chg
-18%
51%
(% of Net Sales)
5.6
4.6
5.1
Interest & other Charges
63
72
85
Other Income
7
5
4
PBT
112
80
140
% chg
-34%
76%
Tax
31
21
36
(% of PBT)
25.5
26.3
25.7
PAT
82
59
104
% chg
-28%
77%
(% of Net Sales)
3
1.8
2.4
Basic EPS (Rs)
2.1
1.5
2.7
Source: Company, Angel Research
Electronics Mart India Ltd | IPO Note
October 3, 2022
5
Balance Sheet (Consolidated)
Y/E March (₹ cr)
FY’20
FY’21
FY’22
SOURCES OF FUNDS
Equity Share Capital
300
300
300
Reserves& Surplus
133
192
297
Shareholders’ Funds
433
492
597
Total Loans
872
968
1,143
Other Liabilities
1
2
1
Total Equity & Liabilities
1,306
1,462
1,741
APPLICATION OF FUNDS
Net Block
571
674
785
Goodwill
-
-
-
Capital Work-in-Progress
2
2
24
Investments
-
-
-
Current Assets
722
803
949
Inventories
402
481
614
Sundry Debtors
85
95
108
Cash
87
35
34
Loans & Advances
1
1
1
Other Assets
147
191
192
Current liabilities
42
62
84
Net Current Assets
680
742
865
Deferred Tax Assets (net)
7
12
18
Other Assets
45
33
49
Total Assets
1,306
1,462
1,741
Source: Company, Angel Research
Electronics Mart India Ltd | IPO Note
October 3, 2022
6
Cashflow Statement (Consolidated)
Y/E March (₹ cr)
FY’20
FY’21
FY’22
Profit before tax
32
61
127
Depreciation
35
34
35
Change in Working Capital
30
-2
-121
Interest / Dividend (Net)
30
28
23
Direct taxes paid
(13)
-1
-31
Others
0
2
4
Cash Flow from Operations
113
121
36
(Inc.)/ Dec. in Fixed Assets
(74)
-42
-47
(Inc.)/ Dec. in Investments
5
0
-1
Interest Received
1
21
-6
Cash Flow from Investing
(68)
(22)
(53)
Proceed / (Repayment) of long-term borrowings
5
(62)
28
Dividend Paid (Incl. Tax)
(10)
0
0
Interest / Dividend (Net)
(30)
-28
-23
Cash Flow from Financing
(35)
(90)
5
Inc./(Dec.) in Cash
10
9
(12)
Opening Cash balances
14
24
33
Closing Cash balances
24
33
21
Source: Company, Angel Research
Key Ratios
Y/E March (₹ cr)
FY’20
FY'21
FY'22
Valuation Ratio (x)
P/E (on FDEPS)
27.8
38.7
21.8
P/CEPS
17.1
19.4
13.0
P/BV
5.2
4.6
3.8
EV/Sales
1.0
1.0
0.8
Per Share Data (Rs)
EPS (fully diluted)
2.1
1.5
2.7
Cash EPS
3.4
3.0
4.6
Book Value
11.3
12.8
15.5
Returns (%)
ROE
20.7
11.9
17.4
ROCE
13.6
10.0
12.7
Source: Company, Angel Research;
Electronics Mart India Ltd | IPO Note
October 3, 2022
7
Research Team Tel: 022 - 40003600 E-mail: [email protected] Website: www.angelone.in
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