Promoters of Avenue Supermarts will offload 2.28 per cent stake (14.8 million shares) through the offer for sale (OFS) route on Friday. The base price for the share sale has been set at Rs 2,049, a discount of 19.4 per cent to the current market price.
Shares of Avenue Supermarts last closed at Rs 2,542.3, up 2.5 per cent, on the BSE. At the base price, the promoters of the company will be able to mop up over Rs 3,000 crore. Among the selling promoters are Radhakishan Damani, Gopikishan Damani, Shrikantadevi Damani, and Kirandevi Damani.
Following the share sale, Avenue Supermarts, which operates the Dmart retail chain, will become compliant with the 25 per cent public shareholding norms. The deadline to increase the public float to 25 per cent for the company expires next month.
Until recently, the promoter stake in the company was nearly 80 per cent. The stake got diluted to 77.27 per cent after the company issued fresh shares to raise Rs 4,000 crore via the qualified institutional placement (QIP) route.
The QIP saw participation of several marquee investors, including the Government of Singapore, Europacific Growth Fund, Lone Pine Capital, and ICICI Prudential Mutual Fund.
Market players say the OFS could see strong demand given the attractive discount to the current market price. About 10 per cent shares of the OFS will be reserved for retail investors, which will be auctioned on Monday.
The QIP, and now the OFS, are underpinned by a sharp rally in shares of Avenue Supermarts this year. So far in 2020, the stock has rallied 30 per cent, even as the Sensex has remained flat during this period. Currently, Avenue Supermarts commands a market cap of Rs 1.65 trillion.
Following the steep run up, shares of Avenue Supermarts trade at rich valuations, at 90x its estimated earnings for the next financial year, and 70x estimated earnings for the year after that.
Avenue Supermarts is now among India’s top 20 most valuable firms, and its promoter RK Damani is among the top 10 richest Indians.