IPO listed on 28 Jun'24
Stanley Lifestyles Ltd
Minimum Investment
₹ 14,760 / 40 shares
Grey market premium
₹ 162 (44% premium)
Issue price
₹ 369
Listing price
₹ 495
Listing gains
126 (34%)
Listing on
Jun 28, 2024
Our Verdict:
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- Stanley Lifestyles Ltd has demonstrated impressive growth in revenue and EBITDA, driven by an expanding retail network. Since FY21, both gross and EBITDA margins have increased, with gross margins rising by 100 basis points to 51.2%.
- In terms of valuation, the IPO seems aggressively priced with a Price-to-Earnings (P/E) ratio of 84x, based on projected FY24 earnings post-IPO. The lack of directly comparable peers in the market makes it challenging to evaluate this pricing accurately.
- Looking ahead, Stanley plans to expand its product range and aims to grow its store network to over 100 within the next 3-4 years. Although the valuation offers limited upside for short-term investors, Stanley presents significant long-term growth potential. Investors should consider subscribing to the IPO from a long-term perspective.
About the company
Founded in
11 Oct'07
Managing director
Sunil Suresh
- Stanley is a leading furniture brand in India, distinguishing itself as one of the few indigenous super-premium and luxury consumer brands operating at scale in both manufacturing and retail. It offers a comprehensive range of home solutions, including sofas, armchairs, kitchen cabinets, beds, mattresses, and pillows, among others.
- Stanley operates two manufacturing facilities in Bengaluru and conducts retail operations through a network of 38 company-owned and operated (COCO) stores and 24 franchisee-owned and operated (FOFO) stores, spread across 21 cities in 11 states and union territories in India.
STRENGTHS
- Market Dominance: Stanley is India’s largest super-premium and luxury furniture brand, commanding a 6.25% market share by revenue and ranking fourth in the broader home furniture sector. As of January 30, 2024, their retail footprint is triple that of their closest rival in the luxury and super-premium furniture market.
- Strong Financial Performance: Stanley has exhibited exceptional financial growth, with a Compound Annual Growth Rate (CAGR) of 46% in operational revenue from FY21 to FY23. During this period, EBITDA increased by 67% due to an expanded retail footprint, and net profit rose by 326%.
- Solid Fundamentals: Stanley's balance sheet is robust, with positive cash flows from operations over the past three fiscal years. The firm maintains a minimal debt level, with a debt-to-equity ratio near zero despite a substantial inventory.
- Significant Margin Enhancement: The EBITDA margin improved markedly from 15.21% in FY21 to 19.74% in FY23, while the net profit margin increased from 0.98% to 8.35%. Stanley boasts one of the highest PAT margins among leading Indian furniture companies.
- Commitment to Shareholders: Stanley has consistently distributed dividends, with rates at 14.50% for FY21, 94.03% for FY22, and 189.93% for FY23. The firm instituted a dividend policy in August 2023, reflecting its solid financial standing and positive outlook.
RISK FACTORS
- Regional Concentration: A significant portion of Stanley's income is derived from its outlets in Southern India—approximately 77% in 9MFY24 and 80% in FY23. Any adverse events in these regions could negatively impact their financial performance and operational results.
- Product Dependency: Stanley relies heavily on a limited range of products. Sofas and recliners account for more than half of the company's total sales. Shifts in consumer tastes could negatively influence the company's operations.
Financials
Issue details
Issue type
Mainstream
Issue size
₹ 537.02 crore
Fresh Issue
₹ 200 crore
OFS
₹ 337.02 crore
Price range
₹ 351 - 369
Lot size
40 shares
Issue Objective
Stanley intends to utilise the net proceeds from the fresh issue towards:
- Costs associated with opening new stores and flagship stores;
- Costs for renovating existing stores;
- Capital expenditure for acquiring new machinery and equipment; and
- General corporate purposes.
Dates
Bidding open
21 Jun'24
Bidding close
25 Jun'24
Allotment date
26 Jun'24
Refund date
27 Jun'24
Listing
28 Jun'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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