* Stock more than doubles in value
* Strong fundamentals, ownership model helping - analyst
* Organised retail's growth potential seen high
(Updates with details, quote, background)
MUMBAI, March 21 Shares of India's Avenue
Supermarts Ltd more than doubled in value in their
trading debut on Tuesday, after raising 18.7 billion rupees
($285.85 million) in an initial public offering that drew strong
Shares in the popular supermarket operator were trading at
605.70 rupees or up 102.6 percent at 0623 GMT on the National
Stock Exchange, having risen to as high as 616.25 rupees,
compared with their issue price of 299 rupees.
Avenue Supermarts operates 118 supermarkets across 45 cities
under the "D-Mart" brand, offering a range of items from food to
apparel and general merchandise.
India's retail sector is still predominantly dominated by
small neighbourhood stores called "kiranas", while organised
retail penetration levels remain low.
However, India is now seeing the rise of big supermarket
operators such as Reliance Retail, part of Reliance Industries
, and analysts see big scope for growth in the
Avenue Supermarts is seen by analysts as a potential market
leader given its steady increase in stores and its know-how in
operating the stores, having yet to shut a store since its
establishment in 2000.
"Avenue Supermarts has managed its operating costs well
compared to other companies in the sector, mainly because of a
good working cycle and inventory management," said Amarjeet
Maurya, senior research analyst at Angel Broking.
"At a time when the retail industry is doing bad and there
isn't a lot of penetration, the company is still generating good
profit and return ratios compared to its peers, and that is why
it is getting a reward today."
The IPO, the country's biggest so far this year, was
subscribed 106 times, and attracted anchor investors including
the government of Singapore and Goldman Sachs.
India recorded its best year in IPOs in six in 2016 with $4
billion worth of share sales, and has seen a continued number of
high-profile listings this year, including a $185 million IPO by
BSE Ltd, the country's second-biggest bourse.
Avenue Supermarkets predominantly works on an
ownership-based model and owns most its stores, as against the
rental-based model of its peers.
Among the key risks to the company's future are its large
concentration in the states of Maharashtra and Gujarat, which
bring in nearly 81 percent of its revenue, and delays in
operations, analysts at brokerage Geojit wrote in a recent note.
($1 = 65.4200 Indian rupees)
(Reporting by Swati Bhat and Darshana Sankararaman; Editing by
Rafael Nam and Amrutha Gayathri)