Small & Mid Cap focused Value Investor

Gokul Raj. P

Equity Capital Markets

Avenue Supermarts Ltd / Equity Capital Markets

DMart's IPO is finally launching on March 8 and closes on March 10. The company intends to raise around 1870 Cr Rs at a post-money valuation of 18,640 Cr Rs at the higher end of the IPO price band. This valuation translates into a pre-money P/E multiple of 32.5X (FY 17 annualized earnings) and EV/ EBITDA of 17.5X (FY 17 annualized operating profit). In my <a href="https://www.smartkarma.com/insights/india-s-true-outsider-ceo-is-d-mart-a-wide-moat-compounding-machine" target="_blank">earlier note on DMart</a>, I had written in detail about why this retailer is a very special business and can be a wide moat compounder for investors. Hence I am not focusing too much on the business opportunity in this note and instead, trying to understand the underlying valuation metrics to buy these special businesses. While 32.5X current year earnings look costly optically, we believe that the stock offers attractive investment opportunity even at this valuations. As Warren Buffet famously said, "Time is a friend of good businesses". Any investor who is looking for a 5 year+ investment horizon would find this investment attractive.

DMart's IPO is finally launching on March 8 and closes on March 10. The company intends to raise around 1870 Cr Rs at a post-money valuation of 18,640 Cr Rs at the higher end of the IPO price band. This valuation translates into a pre-money P/E multiple of 32.5X (FY 17 annualized earnings) and EV/ EBITDA of 17.5X (FY 17 annualized operating profit). In my earlier note on DMart, I had written in detail about why this retailer is a very special business and can be a wide moat compounder for investors. Hence I am not focusing too much on the business opportunity in this note and instead, trying to understand the underlying valuation metrics to buy these special businesses. While 32.5X current year earnings look costly optically, we believe that the stock offers attractive investment opportunity even at this valuations. As Warren Buffet famously said, "Time is a friend of good businesses". Any investor who is looking for a 5 year+ investment horizon would find this investment attractive. 

DMart (Avenue Supermarts) IPO: High-Quality Business Priced at a Deserved Premium !!

D'Mart is an Indian value retailer that is expected to come out with its initial public offering (IPO) in the near future and has recently filed its draft red herring prospectus (DRHP) for the same. As you read through this article, you will realize that D'Mart is no ordinary company and it is an extraordinary story of how an uncanny Outsider CEO with no business experience has built a great organization and emerged as a clear winner in a prized race whose participants include every who's who of the Indian corporate world (Tata's, Birla's, Ambani's, Mittal's, Raheja's, Goenka's and Biyani's), global retail giants (Walmart, Tesco, Carrefour) and new age businesses (Amazon, Flipkart and host of Hyperlocal startups). DMart is the story of an extraordinary individual who has had tremendous success in investing, trading and entrepreneurship (now through D'Mart). You will also understand that the key takeaways fromDMart's success story are very similar to that of any successful investor. It will reiterate that there is no secret sauce to investing success and successful investing is simple but not easy. The core essence of DMart's story is that of "focus", "discipline", "contrarian", "rationality" and "long-term orientation". I have tried to comprehensively analyze D'Mart and its wide moat through this article.

D'Mart is an Indian value retailer that is expected to come out with its initial public offering (IPO) in the near future and has recently filed its draft red herring prospectus (DRHP) for the same. As you read through this article, you will realize that D'Mart is no ordinary company and it is an extraordinary story of how an uncanny Outsider CEO with no business experience has built a great organization and emerged as a clear winner in a prized race whose participants include every who's who of the Indian corporate world (Tata's, Birla's, Ambani's, Mittal's, Raheja's, Goenka's and Biyani's), global retail giants (Walmart, Tesco, Carrefour) and new age businesses (Amazon, Flipkart and host of Hyperlocal startups). DMart is the story of an extraordinary individual who has had tremendous success in investing, trading and entrepreneurship (now through D'Mart). You will also understand that the key takeaways fromDMart's success story are very similar to that of any successful investor. It will reiterate that there is no secret sauce to investing success and successful investing is simple but not easy. The core essence of DMart's story is that of "focus", "discipline", "contrarian", "rationality" and "long-term orientation". I have tried to comprehensively analyze D'Mart and its wide moat through this article. 

India's True Outsider CEO - Is D'Mart a Wide-Moat Compounding Machine ?

India

Avenue Supermarts Ltd. (ASL) owns and operates hypermarkets and supermarkets. The Company offers products such as garments, footwears, toys and games, bed and bath linen, stationery, grocery, household, and electronic products. ASL operates throughout India.

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Avenue Supermarts Ltd (DMART IN)

DMart (Avenue Supermarts) IPO: High-Quality Business Priced at a Deserved Premium !!

DMart's IPO is finally launching on March 8 and closes on March 10. The company intends to raise around 1870 Cr Rs at a post-money valuation of...

Gokul Raj. P

India's True Outsider CEO - Is D'Mart a Wide-Moat Compounding Machine ?

D'Mart is an Indian value retailer that is expected to come out with its initial public offering (IPO) in the near future and has recently filed...

Gokul Raj. P

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