D-Mart IPO subscribed 1.36 times on Day 1
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Mumbai: The initial public offering (IPO) of Avenue Supermarts Ltd, which runs the D-Mart supermarket chain, opened to robust subscription on Wednesday with investors bidding for 1.36 times the number of shares on offer.
D-Mart, one of India’s most profitable supermarkets, is aiming to raise Rs1,870 crore through the IPO. The company posted Rs300.92 crore in profit after tax on a revenue of Rs8,800.03 crore in the last nine months of 2016.
Institutional investors bid for 1.84 times the number of shares set aside for them, while high networth individuals and retail investors bid for 0.52 times and 1.44 times the shares available for them, stock exchange data showed. The share sale closes on 10 March.
D-Mart operates 118 stores, with 3.59 million sq. ft of store space, across 45 cities. The company gets 59% of its sales from Maharashtra and Daman, and 18% from Gujarat, despite being present in eight states.
The strong demand could be attributed to its superior performance, compared with its peers, according to a Mint analysis on 27 February.
In fiscal 2016, D-Mart made a profit of Rs300.21 crore on a revenue of nearly Rs8,600 crore. The company’s profit after tax rose about 50% year-on-year.
In comparison, Reliance Retail, a subsidiary of Reliance Industries Ltd that operates supermarket chains, made a net profit of Rs306.54 crore on an annual revenue of Rs18,399 crore, more than double that of Avenue Supermarts.
Kishore Biyani’s Future Retail posted a net profit of Rs14.55 crore in fiscal 2016 following a Rs379.21-crore loss the previous year. The firm’s annual revenue was Rs6,845 crore, according to the company’s annual report for fiscal 2016.
On Tuesday, D-Mart had raised Rs561 crore by selling shares to investors as part of the so-called anchor book allocation. The anchor book is that portion of an IPO that bankers can allot to institutional investors on a discretionary basis. Anchor book subscription opens a day before the launch of an IPO and acts as an indicator of institutional investor interest.
Shares were allotted to anchor investors at Rs299 each, the upper end of the IPO price band of Rs295-299 per share.
Investors who participated in the anchor book allocation include Smallcap World Fund, New World Fund, Fidelity, Govt of Singapore, JP Morgan, T Rowe Price, HDFC Mutual Fund, ICICI Prudential Mutual Fund and SBI Mutual Fund. A total of 35 investors participated in the anchor book allocation. Avenue plans to use Rs1,080 crore to repay debt and Rs300.6 crore to purchase and build new stores.
Meanwhile, the IPO of Radio City FM operator Music Broadcast Ltd was oversubscribed 39.3 times on Wednesday, the last day of the offering. The issue had opened on 6 March.
The portion reserved for high net-worth individuals was subscribed 109 times, while the institutional investors and retail investors categories were subscribed 39.7 times and 9.1 times respectively.