Skip to main content

D-Mart: Stock that doubled in a day; worth it?

Image
By
Its not everyday, that you see a stock (not a Penny stock), that has doubled in value, and that too specifically on its IPO. Without further delay, lets look into the company, the reasons behind the D-Day and Is it worth it.





Shares of Avenue Supermarts Ltd, the parent of D-Mart, saw a stellar listing on Tuesday as it surged over 110% after its initial public offer (IPO) to raise Rs1,870 crore was subscribed more than 100 times earlier this month.
Avenue Supermarts’ shares opened 102.14% higher on the BSE at Rs 604.40 a piece , compared to the issue price of Rs299 per share,which was the upper end of the price band.
At 12.37pm, the shares were up 108% to trade at Rs620.50, while benchmark 30-share Sensex falls 0.35% to trade at 29,416 points.
The scrip continued the upward trajectory and closed up 115% at Rs 640.75 a piece on BSE.
Earlier in the day, the shares touched a high of Rs650 and a low of Rs558.75, respectively.
The company raised Rs 1,870 crore from the IPO and became the first company in twelve years to get listed at a premium of over 100%.
Since the shares of DMart were oversubscribed by over 105 times, many retail investors were left with little shares than what they had originally applied for. 
This is the reason why shares of the company have more than doubled within a day of trading. 
The supermarket chain, with a focus on value-retailing, opened its first store in Mumbai in 2002, and had expanded to 118 outlets as of 31 January, 2017.
For the nine months to December 2016, the company reported a total revenue of Rs8,803 crore. Its net profit grew at a CAGR (compounded annual growth rate) of 40.55% from fiscal 2014 to Rs318.76 crore in fiscal year 2016. For the nine months to December, its net profit was Rs387.47 crore.
The supermarket chain, with a focus on value-retailing, opened its first store in Mumbai in 2002, and had expanded to 118 stores as of 31 January.
Avenue Supermarts intends to use the proceeds from the D-Mart IPO to repay debt of Rs1,080 crore, fund the construction and purchase of fit-outs for new stores to the tune of Rs366.6 crore, and the rest for general corporate purposes.
So, is there still an opportunity to invest in the company or have the valuations now look stretched? 
Medium and short term investors/traders should at least book partial profits as in medium term D-Mart stock can under-perform given its stretched valuations and also the market is consolidating after making a fresh high. Long term portfolio investors are advised to held on to their positions.
Location: Tamil Nadu, India

Comments

Post a Comment

Popular posts from this blog

Indian Penny Stock Pick: Sunil Hitech Engineers Ltd

By
Shares of Sunil Hitech Engineer s surged nearly 10 per cent on Thursday after the company informed the bourses that it had been awarded four road projects worth of Rs 935 crore in Maharashtra on the EPC mode.  View Full news here. Penny Stocks are low value stocks and majority of companies belongs to Penny stock category are either Loss making companies or companies which lack Fundamentals and credibility.Investor sometime mistakes all low value company as penny stocks but this is not true.In most case the face value of company is Rs 10 but some company will reduce the face value to Rs 1 in that case their stock will also be 1/10 th of similar company which have face value of Rs 10.fo ex if company A has stock value of Rs 8 and face value Rs 10.Another company B has the same stock value of Rs 8 but its face value is Rs 1.In this case if we equate the face value of company B ie face value *10 and stock value also had to multiply by 10 so stock value become Rs 80 So i...
5 comments
Read more

Power of compound intrest.

By
T alking about investing power, quite a few of us would have been involved in financial investments (i.e. deposits, mutual funds, shares, or other). We would have read about windfall gains made by investment gurus and conversely also heard/seen the major risks in equity investments . Let’s take a couple of big examples from the Indian IT space: Wipro and Infosys . The market enthusiasts would already know where I am leading this discussion to, and may want to skip the reading. But for the benefit of the general population, let’s understand how these companies fared since their inception for a shareholder . Case 1: Investing in Wipro What if you / your father could invest 100 shares of Wipro in the year 1980 and did nothing since then? Wipro was founded in 1941 with 17,000 equity shares and incorporated in 1945. As the base price or face value per share price used to be Rs 100 at that time. Assuming a minimum purchase of 100 shares (as was the norm in the era), ...
1 comment
Read more

Top Indian Penny stocks for week 23/9/2017

By
This week has been an exciting one for Indian penny stocks. So without further delay, lets look into the list. These have been the profitable penny stocks this week. And let us know in the comments section on your suggestions for next week’s. for more info, do check out these articles Best Indian Penny Stocks of 2016 Profiting with Indian Penny stocks How to make Huge Profits with Indian Penny stocks
3 comments
Read more

How to start investing in Stock Markets

By
Many people message me through mail and whatsapp, on how one can invest in stock markets  And I am sharing the information regarding How to open and demat account and participate in share trading or investment in Stock Markets. Once demat account is opened you excute the trades either yourself through software provided by broker or you can call and ask your broker to excute the transaction on your behalf. To open a Demat account you have to provide the documents which fulfill the requirements of KYC (Know your cutomer) norms. You have to sign a contract with Stock broker. Documents Needed to Open a Demat Account   The documents required to open a demat account include a proof of address and proof of identity. In addition, applicants will need to submit a copy of their PAN card and passport-sized photographs. PAN (Co mpulsory) Bank statement One cancelled check Address Proof Income Tax Return Demat Account Opening Procedures The procedu...
Post a Comment
Read more

How can YOU be a Crorepati with stock returns!!

By
There have been numerous such companies that have given great returns to investors, like Reliance, Titan, Dr. Reddy Labs, etc. No one can predict which company would grow to such a huge levels before 30 years. Remember, for every Wipro like story, there are thousands of companies which has eroded investors wealth and become penny stocks. Investing in equities alone isn’t enough, investing in the right company at the right time is even more important. Power Of Compound Interest Even if someone invested in the best company in the world, its basic human psychology to book profits when the stock prices increase so many fold. Some investors don’t feel comfortable even for a 50% increase in their investment . No one would have the patience to hold such a stock when he sees how volatile the market is in short-term. If you really want such phenomenal returns, you would have to do lot of fundamental research, do your due diligence on the company and invest in it when it...
Post a Comment
Read more