V-Mart Jumps to a Record High Ahead of DMart’s Pub­lic Of­fer

The Economic Times - - Smart - Mar­ket In­tel­li­gence

Mum­bai: Shares of V-Mart Re­tail have wit­nessed an up­surge in in­vestor in­ter­est ahead of the ini­tial pub­lic of­fer­ing of Av­enue Su­per­marts which op­er­ates re­tail su­per­mar­ket chain DMart. The stock has jumped 53% to hit a record high of ₹ 759.85 on Thurs­day.

An­a­lysts said stocks of re­tail­ers are draw­ing in­ter­est as DMart is likely to com­mand a high val­u­a­tion of about ₹ 18,000 crore. DMart, a lead­ing re­tailer, is ex­pected to hit the mar­ket with its IPO over the next cou­ple of weeks.

Shares of V-Mart ended up 7.7% at ₹ 720.45 on the BSE on Thurs­day. The stock has out­per­formed the BSE Small­cap in­dex, which gained a lit­tle over 5% in the last one month.

“When­ever a pub­lic is­sue comes, peer group stocks wit­ness a rally. Re­tail­ers are ral­ly­ing based on the up­com­ing DMart IPO,” said AK Prab­hakar, head of re­search at IDBI Cap­i­tal.

Ac­cord­ing to in­de­pen­dent ad­vi­sor SP Tul­sian, in­vestors have re­alised that busi­ness model of e-com­merce firms are not sus­tain­able and there­fore, they are shift­ing fo­cus again to brick-and-mor­tar model, which is also draw­ing in­vestors to­wards re­tail­ers.

The Delhi-based firm V-Mart Re­tail re­ported a net profit of ₹ 21.2 crore in the quar­ter ended De­cem­ber 2016, up 81% from a year ago, while rev­enue rose 23.4% to ₹ 327 crore.

Some an­a­lysts ad­vised avoid­ing V-Mart as it has be­come ex­pen­sive af­ter the re­cent surge. The stock trades at a price-to-earn­ings ra­tio of 37.2, higher than the five-year av­er­age P/E of 26.2. HIGHS & LOWS

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