For some 'lucky' investors who managed to get allotment of D-Mart shares in IPO, it has been bumper gains. D-Mart shares debuted with over 100 per cent gains as compared to their issue price of Rs 299. D-Mart's Rs 1,870 crore IPO saw high demand and was subscribed more than 104 times earlier this month. Retail investors' category was also oversubscribed 7.36 times. The portion set aside for qualified institutional buyers (QIBs) was oversubscribed 144.6 times and that of non-institutional investors 277.74 times.
But now the important question is whether investors who could not get allotment in IPO buy D-Mart shares buy now?
Deven Choksey, MD of KR Choksey Securities, is optimistic that D-Mart will be able to sustain profit growth in the future. But after the sharp run-up, the valuation of D-Mart looks slightly expensive, Mr Choksey says, adding that investors can look to buy D-Mart shares for long term on price or time correction.
Mr Choksey says since necessity products like food contributes over 60 per cent towards D-Mart's revenue, repeat purchase is likely to be very high
Mr Choksey has a word of caution: Since the D-Mart shares are trading at premium valuation, he says, "investors should hold for the long term. Otherwise they will be hurt." Since D-Mart will reduce some part of its debt from the IPO proceeds, its bottomline will also get a boost in the future, Mr Choksey adds.
Kaustubh Pawaskar of Sharekhan says in terms of financial performance, D-Mart stands out among its peers. He also remains optimistic that D-Mart will be able to sustain its growth in the future.
"Gradually D-Mart will be pan-India player but it will not happen immediately. Its strategy is to make new stores profitable and then get into other territories," he said. Expansion and macro environment will drive D-Mart's performance, he added.
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