Baazar Style Retail, Backed by Jhunjhunwala, Secures ₹37 Crore in Pre-IPO Funding
Baazar Style Retail, backed by renowned investor Rekha Rakesh Jhunjhunwala, has successfully raised ₹37 crore in a pre-IPO placement from institutional investors, including Volrado Ventures Partners Fund II. This strategic move comes as the company gears up for its initial public offering (IPO), and the recent funds were raised through a private placement of 956,072 shares at ₹387 per share, as reported on Monday, August 5.
Trimming Down the Fresh Issue Size
With the latest tranche of fundraising, Baazar Style Retail has adjusted its IPO plans, reducing the fresh issue size to ₹148 crore from the previously planned ₹185 crore. This adjustment reflects the company’s dynamic approach to optimizing its capital structure in preparation for the IPO.
Leadership in Eastern India’s Retail Market
Baazar Style Retail stands out as a value fashion retailer with the largest retail footprint in Eastern India. The company holds a leadership position in the organized value retail markets of West Bengal and Odisha. This dominant presence is a testament to its strategic expansion and effective market penetration since its incorporation in 2014.
Details from the DRHP
According to the Draft Red Herring Prospectus (DRHP) filed in March 2024, the public issue, with a face value of ₹5 per equity share, includes a mix of a fresh issue and an offer for sale (OFS). The fresh issue aims to raise up to ₹185 crore (now adjusted to ₹148 crore), while the OFS comprises up to 16.88 million shares from the promoter group and other selling shareholders.
Rekha Rakesh Jhunjhunwala’s Stake and OFS
Seasoned investor Rekha Rakesh Jhunjhunwala plans to offload 2,723,120 equity shares in the IPO. She currently holds 5,446,240 equity shares, representing a 7.8% stake in Baazar Style Retail. This move is part of the broader strategy outlined in the DRHP to balance the shareholding structure post-IPO.
Expansion and Growth
Baazar Style Retail has demonstrated impressive growth since its inception. By December 31, 2023, the company had scaled up to 153 stores, covering over 1.39 million square feet across 140 cities in 9 states. Notably, from 2017 to 2023, it was recognized as the fastest-growing value retailer in terms of both store count and revenue from operations. The company also boasted the highest EBITDA margin for FY23, according to a report by Technopak.
The ‘Style Bazaar’ Brand
Over the years, Baazar Style Retail has successfully developed its brand, ‘Style Bazaar,’ which offers a wide range of products that have garnered strong customer loyalty and brand recognition. The company’s focus on value fashion has resonated well with its target market, contributing to its robust growth trajectory.
IPO Details and Strategic Objectives
The IPO includes a reservation for subscriptions by eligible employees, reinforcing the company’s commitment to its workforce. The funds raised through the IPO are earmarked for several strategic objectives:
- Expansion of Retail Footprint: Continuing to grow its network of stores in Eastern India and beyond.
- Enhancing Supply Chain Infrastructure: Improving logistics and inventory management systems to support the expanded store network.
- Strengthening Brand Presence: Investing in marketing and promotional activities to further enhance brand recognition and customer loyalty.
- Debt Reduction: Utilizing part of the proceeds to reduce existing debt, thereby improving financial stability and operational flexibility.
- General Corporate Purposes: Allocating funds for various corporate expenses to ensure smooth operational execution and strategic initiatives.
Lead Managers and Registrar
Axis Capital, Intensive Fiscal Services, and JM Financial are the book-running lead managers for the IPO. Link Intime India has been appointed as the registrar for the issue, ensuring a smooth and efficient IPO process.
Market Position and Competitive Edge
Baazar Style Retail’s market leadership in Eastern India’s value fashion segment is underpinned by its extensive retail network and strong brand equity. The company’s competitive edge lies in its ability to offer fashionable products at affordable prices, catering to a broad customer base. This value proposition, combined with a strategic focus on expansion and operational excellence, positions Baazar Style Retail as a formidable player in the retail sector.
Investment Highlights
Strong Financial Performance: Baazar Style Retail has consistently demonstrated robust financial performance, driven by strategic expansion and effective cost management.
Market Leadership: The company’s leadership in key regional markets provides a solid foundation for continued growth and market penetration.
Growth Potential: The planned use of IPO proceeds for expansion and infrastructure enhancement positions the company well for future growth.
Experienced Management: The company benefits from a seasoned management team with extensive experience in the retail sector.
Risk Factors
Investors should consider several risk factors before investing in the Baazar Style Retail IPO:
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The retail sector is intensely competitive, with many companies competing for market share.
- Economic Conditions: Changes in economic conditions can impact consumer spending and, consequently, the company’s revenue and profitability.
- Operational Risks: The success of the company’s expansion plans depends on the efficient execution of new store openings and the establishment of logistics infrastructure.
- Regulatory Risks: Changes in government policies and regulations can affect the company’s operations and financial performance.
Conclusion
The Baazar Style Retail IPO represents a significant opportunity for investors seeking exposure to a leading value fashion retailer in Eastern India. With its strong market position, impressive growth trajectory, and strategic expansion plans, Baazar Style Retail is well-positioned to capitalize on the growing demand for value fashion. Investors looking for a promising retail sector play should consider the Baazar Style Retail IPO as a valuable addition to their investment portfolios.
Disclaimer: The opinions and recommendations provided above reflect the views of individual analysts or brokerage firms and do not represent those of OSTP Media. We recommend that investors consult with certified experts before making any investment decisions.
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