The retailer’s shares began trading at 107 rupees, a premium of 37% over its initial public offering (IPO) price of 78 rupees apiece. They climbed as high as 111.2 rupees in early trading. The sale drew bids for over 27 times the shares offered last week. 

Vishal Mega Mart runs a network of over 600 stores across India, catering to the middle- and lower-income consumers. Its debut comes amid a challenging environment, with quick-commerce firms upending traditional brick-and-mortar retailers. Investor sentiment has cooled towards Avenue Supermarts Ltd, the operator of DMart chain and the country’s largest value retailer.

The company may have an edge over its rivals, as 75% of its stores are in second-tier cities and smaller towns. “The company’s focus on value pricing is attracting customers,” said Rajan Shinde, an analyst at Mehta Equities Ltd, adding that the valuation — 69 times annualised earnings for the latest fiscal year — is “reasonable” compared to peers trading at 90-100 times.

Vishal Mega Mart derives over half its revenue from general merchandise and fast-moving consumer goods, with apparel accounting for the rest. It reported a profit of 4.6 billion rupees (US$54 million), on a revenue of 89.1 billion rupees in the year ended March, according to its IPO document. 

The company raised US$283 million from anchor investors, including the Singaporean government, and funds managed by Nomura and Blackrock. The IPO underlined a strong year for India’s equity markets, where over 300 companies have raised almost US$18 billion in first-time share sales.

Founder Samayat Services LLP sold shares via the offering, with no fresh capital raised by the company. The IPO valued the Gurugram-based company at US$4 billion.

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