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Retail chain D-Mart files for $280 mn IPO

30 September, 2016

Avenue Supermarts Ltd, which runs hypermarkets and supermarkets under the D-Mart brand, has filed its draft red herring prospectus (DRHP) with the capital markets regulator Securities and Exchange Board of India to float its initial public offering.

The proposed offering is a fresh issue of shares by the company to raise up to Rs 1,870 crore ($280 million). The company will use almost three-fifths of the net proceeds to repay debt and part of the money to open new stores.

Earlier this month, VCCircle had first reported that the company picked Kotak Mahindra Capital as the lead banker for the IPO.

D-Mart is the first multi-line retail company to float an IPO in almost a decade. Although some speciality offline retailers such as jewellers and e-commerce firm Infibeam went public in the past two years, the last multi-line offline retailer to go public was V2 Retail (earlier known as Vishal Retail) in 2007. A successful listing of D-Mart could open the window for other peers to test the public market.

Here’s a snapshot of D-Mart and the issue:

Issue size:A fresh issue of shares to mop up Rs 1,870 crore.

Bankers: Kotak Mahindra Capital, Axis Capital, Edelweiss, HDFC Bank, ICICI Securities, Inga Capital, JM Financial, Motilal Oswal and SBI Capital Markets.

Objects of the issue: The company will use Rs 1,080 crore of the net proceeds for repayment or advance payment of a portion of loans and redemption or earlier redemption of non-convertible debentures availed by the retail chain. Besides, nearly Rs 367 crore will be used for setting up new stores.

Company

Founded in 2000, D-Mart sells products including foods, toiletries, garments, kitchenware, bed and bath linen, toys and games, stationery, home appliances and footwear. It has 112 stores in 41 cities spread across Maharashtra, Gujarat, Telangana, Andhra Pradesh, Karnataka, Madhya Pradesh, Chhattisgarh and the national capital region, as per its website. As of 15 September 2016, it had 21 distribution centres and six packing centres in Maharashtra, Gujarat, Telangana and Karnataka.

The foods category seems to be biggest revenue generator for the company. The category that includes items such as staples, groceries, fruits and vegetables, snacks and processed foods, dairy and frozen products, beverages and confectionery contributed 53% to net sales during 2015-16.

Financials

The company’s consolidated net revenue jumped 33% in the year through March 2016 to Rs 8,588.12 crore from Rs 6,439.43 crore the year before. Net profit surged 51% to Rs 321.2 crore to Rs 211.7 crore.

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Retail chain D-Mart files for $280 mn IPO

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