With IPO coming up, there is a lot of buzz about Avenue Supermarts Ltd which is the parent company of D-Mart group of shopping market. I guess given the price benefit d-mart is a preferred choice by the consumers (at least in Mumbai) over other competitors like big bazar, reliance retail etc.
The USP of the company is the is huge land bank in metros and tier 2 cities which saves a lot of lease rental expenses of the company. The proceeds of the IPO would be used to reduce a large amount of debt from its book in turn reducing future capital commitments towards principal and interest.
As of March 31, 2016, the company had a revenue of Rs 86 bln and a net profit of about Rs 3.2 bln, translating into an earnings per share of Rs 5.67. If the company is being listed in the highest price of the band i.e 299 due to brand and reputed investor Mr R.K.Damani holding majority of stake, resulting into a PE multiple of 50+.
Is it a worthy bet? Would like to know your comments on the same.