After a 53% listing, short-term investors may seek to book partial profits in Electronics Mart, analysts said, who believe investors who did not get Electronics Mart shares in the allotment process – but still wish to enter the meter – can look for an entry in the Rs 75-80 range. Existing investors with a good appetite for risk can hold the stock for two to three years, analysts said.
Electronics Mart was listed at Rs 90 each on NSE, a 52.54% premium to its issue price of Rs 59.
Hem Securities’ Astha Jain said she expected the IPO to list at around 45% premium, but the certificate debuted at Rs 90 on NSE, a 53% premium. While Jain has a target of Rs 99 on the certificate, she estimated that one could make a profit on 50% of their holdings at the level of Rs 89-90. It is even then that she sees long-term potential in the retail business of durable consumer goods.
Despite a solid listing, Electronics Mart’s valuations don’t look stretched, said Narottam Dharawat of Dharawat Securities, who added that long-term investors can still hold the stock over a two- to three-year horizon.
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“For those who didn’t get an allocation and still want to enter the meter, they can look for levels of Rs 75-80,” he said.
Electronics Mart is India’s fourth largest consumer durables and electronics retailer, offering major appliances such as air conditioners, televisions, washing machines and refrigerators, mobile phones and small appliances, technology information and others. Its offering includes more than 6,000 storage units in all product categories from more than 70 brands of consumer durables and electronics.
Swastika Investmart’s Pravesh Gour said Electronics Mart’s strong listing can be attributed to strong investor interest, reasonable valuations and optimistic growth prospects. He advised investors to lock in listing gains and said only aggressive investors should consider making a long-term commitment to the company.
“Those who have requested listing gains can maintain a stop loss of Rs 77,” he said.
Gour said the consumer durables and electronics industry in India is under-penetrated and has a long streak for growth. That said, the industry is fiercely competitive and has been disrupted by e-commerce players. Electronics Mart faces significant competition from players such as Reliance Retail, Croma, etc.
The Rs 500 crore IPO, which sold from October 4-7 in the Rs 56-59 price range, received 71.93 times bids. This is the second highest of all IPOs in 2022 so far.
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Harsha Engineers International’s IPO attracted the highest bid 74.70 times, followed by Dreamfolks Services (56.68 times) and Campus Activewear (51.75 times).
Harsha Engineers listed on September 26 at a 36% premium to its issue price of Rs 330. Dreamfolks Services saw a 56% increase earlier that month. Campus Activewear had also jumped 23% on its list in May this year.
Electronics Mart received 4,49,53,64,644 bids against the issue size of 6,25,00,000 shares, the QIB quota getting 169.54 times the subscription. Quotas reserved for non-institutional investors (NII) and individual retail investors (RII) were subscribed 63.59 times and 19.71 times respectively.