Strong Demand for Avenue Supermart QIP

D’Mart retail chain operator Avenue Supermart has successfully completed qualified institutional placement (QIP) issue.

It raised Rs 4,098 crore from the share sale to leading institutional investors such as Lone Cypress and the Singapore Government.

The company issued and allotted 2 crore shares at an issue price of Rs 2,049 per share. The issue opened on February 5, 2020, and closed on February 10, 2020.

The successful completion of the issue is suggestive of the strong appetite for D’Mart retail chain operators.

Some of the leading investors include HSBC Global, Key Square, White Oak, Lone Pine, Birla MF, BFAM, Factorial, Reliance MF, Axis MF, GIC, ICICI Pru, Arisaig, and SBI MF.

Avenue Supermart share retreated from a 52-week high hit on Monday.

Its market capitalization surged above Rs 1.55 lakh crore, making the 18th most valuable company on BSE in terms of market capitalization, ahead of Nestle India and Bajaj Finserv which are in 19th and 20th position respectively.

Last week, DMart had entered the list of top 20 most valued companies by market capitalization on BSE, replacing Wipro. Avenue Supermart share made a debut on the bourses on March 21, 2017.

The company opened its first D’Mart store in Mumbai in 2002. As of December 31, 2019, the company had 196 stores with a retail business Area of 6.97 million sq. ft.

For the December quarter, total revenue Avenue Supermarts stood at Rs 6,809 crore, as compared to Rs 5,474 crore in the same period last year.

Net profit jumped to Rs. 384 crore for Q3 FY20, as compared to Rs.247 crore in the corresponding quarter of last year. PAT margin improved from 4.5% in Q3 FY19 to 5.6% in Q3 FY20.

A closer look at the consolidated and standalone revenue numbers shows momentum in the online DMart Ready format and private labels remaining strong – 144% on year/36% on quarter revenue growth with EBITDA margin expansion of 130bps on the quarter.

The addition of seven stores took the 9MFY20 total addition to 20, putting the company on course to meet its full-year guidance of 30 stores.

Avenue Supermart opened 20 stores during the first nine months of this financial year.

DMart is a play on India’s organized retail story, and it is likely to deliver a steady performance in the current fiscal year. Increased competition in the retail space is likely to make incremental margin expansion a challenge.

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