Electronics Mart shares to list on BSE, NSE on Monday; here’s what grey market premium indicates

Electonics Mart IPO, which received an overwhelming response from investors, may list at a significant premium on bourses on Monday. According to 5paisa.com, grey market premium (GMP) of the company was hovering around Rs 30 on Friday against the issue price of Rs 59, indicating an upside of over 50 per cent on listing.

The Rs 500-crore public offer, which was opened for subscription on October 4, 2022, got oversubscribed by 71.93 times on the last day of bidding process on October 7. The issue received bids for 4,49,53,64,644 shares against 6,25,00,000 shares offered by the company.

Meanwhile, the QIB category attracted 169.54 times bids while the quotas reserved for non-institutional investors (NIIs) and retail individual investors (RIIs) were subscribed 63.59 times and 19.71 times, respectively.

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On the other hand, data available with IPOWatch showed that grey market premium of Electronics Mart was up around 40 per cent in the evening trade on Friday.

Electronics Mart India (EMIL) is the fourth largest and one of the fastest growing consumer durables and electronics retailers in India. It is the largest regional organised player in the southern region in revenue terms with dominance in Telangana and Andhra Pradesh. EMIL registered healthy revenue CAGR of around 17.9 per cent in FY16-21. It has remained profitable even during the pandemic while its EBITDA margin has been in the range of 6-7 per cent over FY20-22.

Most of the brokerage including ICICI Securities, Choice Broking and KR Choksey gave ‘Subscribe’ rating to the issue.

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“At upper price band, EMIL is valued at 0.6 times EV/sales and 22 times P/E of FY22. We assign a ‘Subscribe’ rating as valuations appear reasonable considering the company’s strong and sustainable growth prospects and continued focus on maintaining balance of revenue growth with consistent margins in line with industry peers,” ICICI Securities said in a report.