Electronics
Mart India (EMIL), is the 4th largest consumer durable and electronics retailer
in India. As of August 31, 2022, it operates and manages 112 stores with a total
retail business area of 1.12 million square feet (msft), located across 36
cities/urban agglomerates, predominantly in Andhra Pradesh (AP), Telangana and Delhi
NCR (NCR). Hyderabad based Pavan Kumar
Bajaj and Karan Bajaj, are the promoters of the company. Pawan Kumar, who
originally founded it as partnership firm in 1980 has rich experience of more
than 35 year in retail sector.
EMIL
is not engaged in any manufacturing and the products it sells are sourced from
wide variety of suppliers/OEMs, with some of them it has long-standing
relationship of more than 15 years.
EMIL
operates both Multi Brand Outlets (“MBOs”) and Exclusive Brand Outlets (“EBOs”)
arraying multifarious as well as specialized electronic products. As of August
31, 2022, out of 112 stores, 100 stores are MBOs and 12 stores are EBOs.
Currently
about 89 MBOs are operated under the name “Bajaj Electronics”. About eight MBOs
are operated under the name of “Electronics Mart” in the NCR. It also operates two
specialized stores under the name “Kitchen Stories” which caters to the kitchen
specific demands of its customers and one store under the name of “Audio &
Beyond”. EBOs of the company is for global brands of ‘Apple’ and LG. The
company is authorized Apple reseller.
Revenue
from sale of products accounted for 93% of revenue including other operating
income. Further of sales of product
revenue about 97% came from retail, 1.5% from wholesale and balance from e-commerce
in FY22 and Q1FY23.
EMIL
offers a diversified range of products with focus on large appliances (air
conditioners, televisions, washing machines and refrigerators), mobiles and
small appliances which contributed about 53.8%, 30.8% and 15.4% of FY22 revenue
from sales of products respectively.
Issue & object of
the offer
The
issue comprises only fresh issue of equity shares aggregating to Rs 500
crore. Of the net proceeds about Rs
111.441 crore towards funding of capital
expenditure (largely opening of stores and warehouses); Rs 220 crore towards
funding incremental working capital requirements and Rs 55 crore towards
repayment / prepayment of certain borrowings in part or full.
EMIL
intends to set up 58 stores (48 MBOs and 10 EBOs) over FY23-25 in Telangana, AP
and the NCR region and 1 warehouse in NCR during FY24, funded through net
proceeds of the fresh issue.
Strengths
Long
standing retail market presence of more than 3 decades. Associated with more
than 70 electronic brands.
Proven
ability to understand local needs and offer right mix of product assortments at
competitive pricing, focus on differentiated customer experience/engagement and
quick response to changing customer preferences.
Strong
brand presence under the name 'Bajaj Electronics' in Telangana and AP markets
which together contribute about 99.5% of total retail sales revenue in
Q1FY23. Expanding to new geographies
i.e. NCR market.
EMIL
provides a complete and unique shopping experience to its customers, by either
showcasing a wide range of electronic products under one roof in its MBO model
or providing a specialized brand experience with EBOs.
Of the
current 112 operating retail stores about 49 stores are less than 3 years vintage
providing enough room for growth.
Strong demand growth for consumer
durables and consumer electronics driven by new demand given under-penetration
as well as replacement/upgradtion demand.
Weaknesses
Operating
in a highly competitive and significantly seasonal consumer durable and
electronics retail sector.
Do
not own certain trademark or logo including its popular “BAJAJ ELECTRONICS” as
well as that of ‘Electronics Mart’, ‘EMI Electronics Mart India’ and ‘EMIL’. Further the company is currently involved in
legal proceedings with Bajaj Electricals who is alleging infringement of its
trademark ‘Bajaj Electricals’ by EMIL. If the legal proceedings go against it, ,
it may not be able to use the trademark
“BAJAJ ELECTRONICS” outside the states of Telangana & AP.
High
geographical concentration with about 99-99.5% revenue coming from two states
of AP & Telangana.
Valuation
Consolidated
revenue for the fiscal ended March 2022 was up 36% to Rs 4349.32 crore. But
with operating profit margin expand by 30 bps to 6.7%, the operating profit was up 43% to Rs 291.94
crore. The PAT was up 77% to Rs 103.89 crore.
For first quarter ended June 30, 2022, on sales of Rs 1408.45 crore, the
PAT was Rs 40.66 crore.
The offer
at upper price band is made at 21.9 times its consolidated FY22 EPS. In comparison the Aditya Vision, a retailer of
consumer durables in the states of Bihar and Jharkhand and comparable peer, is
quoting at a PE of 48.6 times of its standalone FY22 EPS.
Electronics Mart lndia: Issue
Highlights
|
|
Fresh Issue (in Rs. Crore)
|
500
|
Price band (Rs.)
|
|
Upper
|
59
|
Lower
|
56
|
Post-issue equity (Rs crore)
|
|
in Upper price band
|
384.75
|
in Lower Price Band
|
389.29
|
Post-issue promoter (including
promoter group) stake (%)
|
77.97
|
Minimum Bid (in nos.)
|
254
|
Issue Open Date
|
04-10-2022
|
Issue Close Date
|
07-10-2022
|
Listing
|
BSE, NSE
|
Rating
|
47 /100
|
Electronics Mart lndia: Re-stated
Consolidated Financial Results
|
|
|
2003 (12)
|
2103 (12)
|
2203 (12)
|
2206 (3)
|
|
Sales
|
3172.48
|
3201.88
|
4349.32
|
1408.45
|
|
OPM (%)
|
7.2
|
6.4
|
6.7
|
6.9
|
|
OP
|
227.64
|
203.88
|
291.94
|
97.04
|
|
Other income
|
6.54
|
5.49
|
3.76
|
1.80
|
|
PBIDT
|
234.18
|
209.37
|
295.69
|
98.84
|
|
Interest
|
63.38
|
71.67
|
84.61
|
23.82
|
|
PBDT
|
170.81
|
137.70
|
211.08
|
75.03
|
|
Depreciation
|
50.76
|
58.14
|
71.32
|
19.93
|
|
PBT
|
120.04
|
79.56
|
139.76
|
55.10
|
|
EO Exp
|
7.87
|
0.00
|
0.00
|
0.00
|
|
PBT after EO
|
112.18
|
79.56
|
139.76
|
55.10
|
|
Tax
|
30.57
|
20.94
|
35.87
|
14.44
|
|
PAT
|
81.61
|
58.62
|
103.89
|
40.66
|
|
PPT
|
0.00
|
0.00
|
0.00
|
0.00
|
|
Net profit
|
81.61
|
58.62
|
103.89
|
40.66
|
|
EPS (Rs)**
|
2.3
|
1.5
|
2.7
|
4.2
|
|
** on post issue equity (on upper
price band) of Rs 384.75 crore. Face Value: Rs 10
|
EPS is calculated after excluding
EO and relevant tax
|
|
|
# EPS can not be annualised due to
seasonality in operations
|
|
|
Figures in Rs crore
|
|
|
|
|
|
|
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Source: Capitaline Corporate
database
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