Baazar Style Retail Ltd, a name synonymous with affordable fashion in Eastern India, is set to make its debut on the Indian stock market with an Initial Public Offering (IPO) that has garnered significant attention from investors. Backed by prominent investor Rekha Jhunjhunwala, Baazar Style Retail operates a chain of ‘value retail’ stores that offer a diverse range of apparel and general merchandise at competitive prices. This article delves into the details of the Baazar Style Retail IPO, including its financials, subscription status, growth prospects, and market expectations.
Baazar Style Retail: Company Overview
Incorporated in June 2013, Baazar Style Retail Ltd has swiftly positioned itself as a leading value fashion retailer in West Bengal and Odisha. The company’s business model revolves around offering quality products at affordable prices, catering to a broad demographic that includes men, women, and children. Apart from apparel, Baazar Style Retail also deals in non-apparel products and basic household items, making it a one-stop shop for value-conscious consumers.
The company operates through a cluster-based expansion strategy, focusing on building additional stores near existing ones to maximize market presence and operational efficiency. This strategy has enabled Baazar Style Retail to grow its store count to 162 across nine states, showcasing a compound annual growth rate (CAGR) of 35.8% from 2017 to 2024.
Baazar Style Retail IPO Details
The Baazar Style Retail IPO opened for subscription on Friday, August 30, 2024, and will close on Tuesday, September 3, 2024. The IPO has a price band of ₹370-₹389 per share, and investors can bid for a minimum of 38 shares in one lot, with the option to purchase additional shares in multiples of 38.
The IPO consists of both a fresh issue of shares worth ₹148 crore and an offer for sale (OFS) by existing shareholders and promoters, amounting to 17.65 million shares. The total issue size is ₹834.68 crore, with the fresh issue aimed at repaying or prepaying the company’s outstanding loans and general corporate purposes.
Investor Allocation and Subscription Status
The Baazar Style Retail IPO is being conducted through the book-building process, with 75% of the net offer reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and 10% for retail investors. Notably, eligible employees participating in the employee reservation portion will receive a ₹35 discount per equity share.
As of the first day of subscription, the IPO has been subscribed 72%. The retail investor portion received an 82% subscription, while the NII quota was subscribed 47%. The QIB portion stands at 70% subscription, and the employee portion has been oversubscribed by 6.01 times.
Financial Performance and Growth Prospects
Baazar Style Retail has demonstrated strong financial growth over the years, particularly in the post-pandemic period. For FY2024, the company reported sales of ₹972.9 crore, reflecting a robust CAGR of 32.86% from FY2022 to FY2024. This growth is largely attributed to the company’s cluster-based expansion strategy and a significant focus on private label offerings, which contributed to 38% of the company’s revenue in FY2024.
Moreover, Baazar Style Retail has shown an improvement in key financial metrics such as Return on Equity (ROE) and Return on Capital Employed (ROCE), which stood at 11% and 18%, respectively, for FY2024. The company’s efforts to optimize its supply chain and enhance operational efficiency have further solidified its position in the competitive retail landscape.
Comparative Analysis with Peers
When compared to its listed peers, Baazar Style Retail stands out in terms of growth potential and valuation. The company is trading at an adjusted price-to-earnings (P/E) ratio of 132x for FY24, which is slightly lower than V-Mart Retail Ltd and V2 Retail Ltd, which have P/E ratios of 139x and 138.88x, respectively. Despite the premium valuation, Baazar Style Retail’s growth trajectory and strategic initiatives make it an attractive investment option.
Analysts’ Recommendations
Leading brokerage firms have given the Baazar Style Retail IPO a “SUBSCRIBE” rating, citing the company’s strong financial performance, growth prospects, and market positioning. Deven Choksey Research highlights the company’s impressive CAGR of 64.57% in private label offerings, along with its effective cluster-based expansion strategy. The brokerage also notes the company’s ability to capitalize on the booming Indian retail sector by expanding its online presence.
Similarly, Akriti Mehrotra, Research Analyst at StoxBox, points out the company’s significant recovery from the pandemic and its plans to pay off its debt, which currently stands at ₹178.2 crore. Mehrotra emphasizes the company’s strategic goals, including improving profitability through private labels and expanding market penetration, as key factors behind the positive recommendation.
Baazar Style Retail IPO Grey Market Premium (GMP)
The grey market has shown a strong appetite for Baazar Style Retail shares, with the IPO grey market premium (GMP) standing at ₹130. This indicates that Baazar Style Retail shares are expected to list at a price of ₹519 per share, which is 33.42% higher than the upper end of the IPO price band.
The consistent upward trend in GMP over the past week suggests that investors are optimistic about the IPO’s listing day performance. The GMP has fluctuated between ₹95 and ₹141, reflecting the high demand and positive sentiment in the market.
Conclusion: Should You Invest in Baazar Style Retail IPO?
The Baazar Style Retail IPO presents a compelling investment opportunity for those looking to gain exposure to the Indian retail sector. With strong financials, a proven business model, and a strategic expansion plan, the company is well-positioned to capitalize on the growing demand for value retail in India.
Investors should consider the company’s growth prospects, market positioning, and the positive outlook from analysts when making their investment decisions. Given the company’s competitive edge and attractive valuation, the Baazar Style Retail IPO is likely to see strong demand, making it a worthwhile addition to your investment portfolio.
Disclaimer: The opinions and suggestions provided above are from individual analysts, experts, and brokerage firms, not from OSTP Media. We encourage investors to consult with certified professionals before making any investment decisions.
Read More: OSTP Media | Tech, Auto, and Trending News