Avenue Supermarts Ltd, operator of hypermarket chain D-Mart, made the best stock market debut in almost a decade on Tuesday as its shares more than doubled thanks to heavy demand from investors.
D-Mart’s shares began trading on the BSE at Rs 604.40 apiece, compared with the initial public offering price of Rs 299, stock-exchange data showed.
The shares traded between Rs 650 and Rs 558.75 before closing at Rs 640.75, giving it a market value of Rs 39,988.21 crore ($6.12 billion). That’s far more than the combined $3.8 billion market capitalisation of five of its well-known peers—Trent Ltd, Future Retail Ltd, Shoppers Stop Ltd, V-Mart Retail Ltd and V2 Retail Ltd.
D-Mart’s 114% gain is the best first-day performance since Adani Port and Special Economic Zones Ltd’s debut in November 2007. Adani Ports recorded listing-day gains of 118% on its offer price of Rs 440 a share, Capitaline data show.
Deven Choksey, managing director at brokerage firm KR Choksey Securities Ltd, said D-Mart’s “attractive” business model, strong fundamentals and growth outlook are attracting investors. The company garners about 60% of its revenue by selling essential items and its sales are unlikely to slow down even in distressed times, he said. He added that the company’s financials will improve as it uses the funds raised through the IPO to cut debt and add to its 118 stores.
“The stock has seen sharp gains because of the euphoria and may appear expensive in terms of valuations. But a price or time correction at any given point is an opportunity to buy D-Mart shares for the long term,” Choksey said.
The retailer’s astounding start follows a blockbuster IPO that was covered 105 times, the highest in India since Quess Corp Ltd’s share sale last year was subscribed 144.5 times.
D-Mart, founded by ace stock market investor Radhakishan Damani, raised Rs 1,870 crore through the IPO. The IPO attracted marquee foreign investors including private equity firm General Atlantic, Singapore sovereign wealth fund GIC Pte Ltd and Capital Group, which is among world’s oldest and largest investment firms.
The retailer joined FM radio channel company Music Broadcast Ltd and stock-exchange BSE Ltd in floating successful public offerings this year. The three IPOs extend the good run after a blockbuster 2016 when fundraising by companies via initial share sales jumped to a six-year high of Rs 26,500 crore.
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