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 %
3%
Listing on
Sept 6, 2024
Our Verdict:
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- 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
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
© 2024 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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