Vishal Mega Mart's ₹8,000cr IPO now open: Should you subscribe?
What's the story
Vishal Mega Mart, one of India's leading hypermarket chains, has launched its initial public offering (IPO) today.
The Gurugram-based company's IPO, which is backed by private equity firm Kedaara Capital, is worth ₹8,000 crore.
The public issue will remain open until December 13 with shares being listed on both NSE and BSE on December 18. Share allotment is scheduled for December 16.
Pricing details
Vishal Mega Mart's IPO price band and current GMP
The price band for Vishal Mega Mart's IPO has been fixed at ₹74-78 per equity share.
Founded in 2001, the company has a pan-India network of 645 stores (as of September 30, 2024) in 414 cities across 28 states and two union territories.
It also provides an online shopping platform through its mobile app and website.
At the time of writing, the the shares of Vishal Mega Mart were commanding a premium of around 22% in the grey market.
Investment tiers
Vishal Mega Mart's IPO structure and investor categories
The structure of Vishal Mega Mart's IPO is entirely an offer for sale (OFS), meaning the company won't get any direct financial benefit from the issue.
Retail investors can apply for a minimum of 190 shares, which would require an initial investment of ₹14,820.
For small non-institutional investors, the entry requirement is 14 lots (2,660 shares) for ₹2.07 lakh.
Large non-institutional investors must invest in at least 68 lots (12,920 shares).
Financial outlook
Vishal Mega Mart's financial health and growth prospects
Vishal Mega Mart is debt-free and has cash and liquid investments worth ₹687 crore as of September 2024.
The company's strong financial position and market dominance have also led to positive ratings from brokerages.
AUM Capital has recommended a 'Subscribe' rating for the issue, citing the company's healthy financials, debt-free status, and long-term growth prospects.
Future strategies
Vishal Mega Mart's expansion plans and potential risks
Vishal Mega Mart plans to open 80-100 new stores in Tier II cities (populations over 50,000).
However, Master Capital Service has flagged risks from the company's dependence on third-party vendors for product manufacturing.
The firm also observed that a large portion of revenues comes from stores in Uttar Pradesh, Karnataka and Assam, which could pose risks if adverse developments occur in these states.