Baazar Style Retail, a value fashion retailer, has launched its initial public offering (IPO), aiming to raise Rs 835 crore. This article will analyze the key aspects of this IPO, including analysts’ recommendations, grey market premium, financial performance, and market dynamics.

Baazar Style Retail IPO: A Look at the Key Details

The IPO price band has been set at Rs 370-Rs 389 per share. The IPO, which opened for subscription on August 30, will conclude on September 3.

Understanding the IPO Structure

The Rs 835-crore IPO comprises a fresh issue of equity shares worth Rs 148 crore and an offer for sale (OFS) of up to 1.76 crore shares, valued at Rs 687 crore (at the upper end of the price band), by promoter group entities and other selling shareholders.

The fresh issue proceeds will be used for debt repayment (Rs 146 crore) and general corporate purposes.

The Market Response

On the first day of bidding, the IPO received a 15 per cent subscription, attracting bids for 22,53,894 shares out of the 1,50,30,116 shares on offer.

Key Players Involved

The book-running lead managers for the Baazar Style Retail IPO are Axis Capital, Intensive Fiscal Services, and JM Financial.

Baazar Style Retail IPO: Grey Market Sentiment

The grey market premium (GMP) for Baazar Style Retail’s IPO stands at Rs 130, implying an expected listing gain of 33.42 per cent.

Baazar Style Retail IPO: Analysts’ Views and Recommendations

A Mixed Bag of Recommendations

Analysts’ opinions on Baazar Style Retail IPO vary.

Positive Outlook:

• Anand Rathi has assigned a ‘Subscribe’ rating, highlighting the company’s strong customer stickiness, revenue growth, and expansion strategy.
• Master Capital Services also recommends a ‘Subscribe’ rating for the medium to long term, emphasizing the potential of the value retail industry in India and Baazar Style Retail’s efforts to capitalize on it.

Cautious Approach:

• Swastika maintains a ‘Neutral’ stance, indicating that investors might choose the IPO for potential listing gains but need to exercise caution due to valuation concerns.

Key Arguments for a ‘Subscribe’ Rating:

• Strong customer retention and loyalty.
• Impressively growing revenue driven by store additions and increased demand.
• Positive growth prospects within the value retail industry.
• The company’s focus on private label expansion and profit margin enhancement.
• Expansion strategy centered around increasing market penetration, extending geographical reach, and solidifying brand loyalty.

Key Arguments for a ‘Neutral’ Rating:

• High valuation, which could potentially deter investors.

Baazar Style Retail: Company Financials and Industry Overview

Impressive Growth in Financials

• Revenue: Baazar Style Retail’s consolidated revenue from operations reached Rs 972.88 crore in FY24, reflecting consistent growth.
• Profitability: The company achieved a profit after tax of Rs 21.94 crore in FY24.

The Value Retail Industry in India: A Thriving Market

The overall lifestyle and home value retail industry in India was estimated to be Rs 6,592.11 billion in FY24. This segment accounts for approximately 54 per cent of the total market in these categories.

Baazar Style Retail’s Strong Market Position

The company enjoys a significant market share, currently at 2.15 per cent in the organized value retail market in Eastern India and North-Eastern India. The company’s future plans include expanding its geographical reach, increasing penetration in existing clusters, and strengthening its brand image.

Baazar Style Retail IPO: A Final Analysis

The Baazar Style Retail IPO presents an intriguing opportunity for investors. The company has strong financials, a clear expansion strategy, and operates in a booming retail market. However, high valuation could be a cause for concern, especially in light of current market volatility.

Key Takeaways

• Investors need to carefully consider both the positive and cautious perspectives of analysts before making any investment decisions.
• Baazar Style Retail has demonstrated solid financial performance and a robust growth trajectory.
• The company’s focus on private label development is a significant factor driving its expansion plans and profitability.
• The grey market premium offers some indication of market sentiment, but it is crucial to analyze the company’s fundamentals independently.
• The success of this IPO will ultimately hinge on the company’s ability to maintain its growth trajectory and successfully implement its strategic plans.