Baazar Style Retail Ltd IPO | News | Overview | Verdict

IPO listed on 6 Sep'24

Baazar Style Retail Ltd

Minimum Investment

₹ 14,782 / 38 shares

Grey market premium

₹ 130 (33% premium)

Issue price

₹ 389

Listing price

₹ 389

Listing day %

Listing on

Sept 6, 2024

Our Verdict:

Baazar Style Retail Ltd (BSRL), established in 2013, is one of the fast-growing retail companies with a strong presence in eastern India. Despite facing 2-3 years of disruptions due to COVID, the firm has successfully grown to achieve a revenue milestone of nearly Rs 1,000 crore by FY24.
The funds from the IPO will be utilized to pay off all existing debts, thus eliminating annual interest expenses of Rs 13.5 crore recorded in FY24.
An uptick in consumer spending in rural regions, particularly in Tier 3 and 4 cities, augurs well for BSRL. The company is on a path of aggressive expansion, with expectations of improved profitability driven by interest cost savings, a higher proportion of private labels, and operating leverage.
The IPO is offered at a price-to-earnings (P/E) ratio of 124x, based on FY24 earnings. Although this valuation might appear high, it remains competitive, offering a discount compared to peers, with comparable or superior net margins and return ratios. The promising grey market premium also indicates a strong market debut.
Given these aspects, investors may consider subscribing to the IPO for a medium-to-long term investment horizon.

About the company

Founded in

3 Jun'13

Managing director

Shreyans Surana

BSRL is a prominent value fashion retailer based in Eastern India. The firm offers a range of affordable products, primarily focusing on apparel, which constitutes approximately 84% of its total revenue, and general merchandise, accounting for about 16%.
As of March 31, 2024, BSRL has expanded its presence to 162 stores spanning 1.47 million square feet across 146 cities under the “Style Bazaar” brand. The firm is backed by notable investors such as Rekha Rakesh Jhunjhunwala, Kewal Kiran Clothing Ltd, and Manohar Lal Agarwal from Haldiram Snacks.

STRENGTHS

Market Leadership: BSRL stands as a leading value retailer in eastern India, boasting market shares of 3.03% in West Bengal and 2.22% in Odisha within the organized value retail market. From 2017 to 2024, it was the fastest-growing among its peers, achieving an impressive 35.8% CAGR in store count, making it the region's top value retailer.
Remarkable Growth: BSRL has shown significant growth in financial performance, with operating revenue and EBITDA expanding at CAGRs of 33% and 44%, respectively, from FY22 to FY24. The company turned around from a Rs 8 crore loss in FY22, mainly due to the pandemic, to a Rs 5 crore profit in FY23, which increased substantially to Rs 22 crore in FY24.
Loyal Customer Base: Approximately 72% of BSRL's sales come from repeat customers, underscoring a strong and loyal customer base.

RISK FACTORS

Regional Concentration: BSRL generates approximately 87% of its revenue from four key eastern Indian states. This geographic focus means that regional disturbances or the dense clustering of stores could negatively affect revenues.
Reliance on External Suppliers: BSRL relies entirely on third-party suppliers for its products, as it does not engage in in-house manufacturing. While the firm works with a broad network of 641 suppliers, with the top 10 accounting for just ~15% of procurement, any supply chain disruptions could hurt its operations.

Financials

All Values are in Cr.

Issue details

Issue type

Mainstream

Issue size

₹ 834.68 crore

Fresh Issue

₹ 148 crore

OFS

₹ 686.68 crore

Price range

₹ 370 - 389

Lot size

38 shares

Issue Objective

BSRL proposes to utilize the net proceeds from the fresh issue towards:

Prepayment or repayment of certain outstanding borrowings; and
General corporate purposes.

Dates

Bidding open

30 Aug'24

Bidding close

3 Sep'24

Allotment date

4 Sep'24

Refund date

5 Sep'24

Listing

6 Sep'24

IPO Reservations

Qualified institutional buyers

<50%

Non-institutional investors

>15%

Retail individual investors

>35%

Read the Offer Document

This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.

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