Baazar Style Retail IPO: Today (Friday, August 30), Baazar Style Retail, backed by Rekha Jhunjhunwala, is ready to debut on the D-Street with its IPO. The value fashion retailer, which offers quality and affordable products in the apparels and general merchandise segments through a chain of ‘value retail’ stores, secured ₹250 crores from anchor investors on Thursday, August 29. Earlier this month, the Kolkata-based company raised ₹37 crore from Volrado Ventures Partners Fund II in a pre-IPO placement round. As a result, the size of the fresh issue was reduced.
The Baazar Style Retail IPO will close for subscription on Tuesday, September 3 and has established a price range of ₹370-389 per share. Investors have the option to bid for a minimum of 38 shares in one lot, with the opportunity to acquire additional shares in multiples of 38. The offer is being conducted through the book building process, ensuring that 75% of the net offer will be accessible for allocation to qualified institutional buyers, while 15% will be available for allocation to non-institutional investors, and 10% will be available for allocation to retail investors.
The Baazar Style Retail IPO has allocated up to 50% of the shares in the public issue for qualified institutional buyers (QIB), 15% for non-institutional investors (NII), and 35% for retail investors. Eligible employees participating in the employee reservation portion will receive a discount of ₹35 per equity share.
Incorporated in June 2013, Bazaar Style Retail Ltd operates as a fashion retailer in West Bengal and Odisha. The company offers a wide range of clothing for all genders and age groups, along with basic household items and non-apparel products.
The company's listed peers are V-Mart Retail Ltd, and V2 Retail Ltd (with a P/E of 138.88).
The initial public offer of Baazar Style Retail has been subscribed 72% on the first day of subscription today, as per BSE data.
The initial share sale received bids for 1,08,27,796 shares against 1,50,30,116 shares on offer, according to BSE data.
The portion for retail investors received 82% subscription while the quota for non-institutional investors got subscribed 47%. The qualified institutional buyers (QIBs) part is booked 70%, and the employee portion has been subscribed 6.01 times.
The brokerage claims that the firm is a top value fashion retailer in Eastern India. In FY2024, it recorded sales of ₹972.9 crore, indicating a strong 32.86% compound annual growth rate from FY2022 to FY2024. Additionally, the company showed an improved trend in ROE and ROCE, with FY24 revenue of 11% and 18%, respectively. By quickly constructing additional stores next to existing ones, the firm has demonstrated the effectiveness of its cluster-based expansion strategy in increasing market presence and operating efficiency. The rise in this area has been driven by a notable emphasis on growing private label offerings, resulting in an impressive 64.57% CAGR.
The firm has gained a competitive edge through investments in supply chain optimisation and operational enhancements. Baazar Style Retail is in a good position to take a bigger chunk of the booming Indian retail industry by sticking to its core of the value retail sector and extending its online presence. Baazar Style is expanding more quickly than its peers and is now selling at a discount, with an adjusted PE of 132x for FY24 compared to 139x for V2 Retail. In light of these elements, the brokerage has rated the IPO as "SUBSCRIBE."
Research Analyst at StoxBox Akriti Mehrotra also notedthat the firm has grown significantly, bringing the total number of stores to 162 in nine states, with a compound annual growth rate (CAGR) of 35.8% from 2017 to 24. The company's recovery from the pandemic has been largely attributed to its cluster-based expansion strategy, which increased sales from ₹787.9 crore in FY23 to ₹972.9 crore in FY24—a 23% increase—with almost 38% of this income coming from private labels. The firm intends to pay off its entire debt of ₹178.2 crore, which is made up of ₹149.1 crore in non-current borrowings and ₹29.1 crore in current borrowings.
Based on FY24 profits, Akriti Mehrotra emphasized that the firm commanded a premium value, with a P/E ratio of 124x at the upper price band. However, taking into account its growth prospects and strategic goals, the brokeragesuggest a "SUBSCRIBE" rating for the issue, given the company's attempts to improve its financial performance, raise profitability through private labels, and extend market penetration.
The IPO consists of a fresh ₹148 crore issuance as well as an offer by the company's current shareholders and promotersto sell up to 17.65 million shares. The OFS comes in at ₹687 crore on the upper band price of the issuance, and the total issue amount is ₹834.68 crore.
The company plans to use the funds raised to prepay or repay part or all of the outstanding loans obtained by the company and for general corporate purposes.
The Baazar Style Retail IPO's book running lead managers are Axis Capital Ltd, Intensive Fiscal Services Private Ltd, and JM Financial Ltd. The issue's registrar is Link Intime India Private Ltd.
Baazar Style Retail IPO grey market price is +130. This indicates Baazar Style Retail share price were trading at a premium of ₹130 in the grey market, according to investorgain.com.
Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Baazar Style Retail share price was indicated at ₹519 apiece, which is 33.42% higher than the IPO price of ₹389.
According to grey market activity over the previous seven sessions, the IPO GMP is heading upward and a robust listing is anticipated. Experts from investorgain.com estimate that the lowest GMP is ₹95 and the maximum GMP is ₹141.
'Grey market premium' indicates investors' readiness to pay more than the issue price.
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