Unlisted shares of Baazar Style Retail Ltd are trading Rs 130 higher in the grey market, signalling a 33.42 per cent listing gain from the public issue.
Baazar Style Retail IPO: The initial public offer of value fashion retailer Baazar Style Retail Ltd has been opened for public subscription on Friday. The price band of the IPO has been fixed at Rs 370-Rs 389 per share. Till 10:59 am on the first day of bidding on Friday, the Rs 834.68-crore IPO received a 15 per cent subscription garnering bids for 22,53,894 shares as against the 1,50,30,116 shares on offer.
The category for non-institutional investors received 0.24 times subscription, while the portion for Retail Individual Investors (RIIs) got subscribed 0.12 times.
The IPO will be closed on September 3.
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Baazar Style Retail IPO GMP Today
According to market observers, unlisted shares of Baazar Style Retail Ltd are trading Rs 130 higher in the grey market than its issue price. The Rs 130 grey market premium or GMP means the grey market is expecting a 33.42 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Baazar Style Retail IPO: Analysts’ Recommendations
Giving a ‘subscribe’ rating to the IPO, brokerage firm Anand Rathi in its note said, “Baazar Style Retail has achieved repeat customer purchases of about 72 per cent in FY24 against 69 per cent in FY22, indicating a high degree of customer stickiness. Its revenue from operations grew at a CAGR of nearly 33 per cent over FY22-24 to Rs 973 crore, led by increased sales volume supported by a rise in store additions and demand. Its Ebitda grew by 40 per cent YoY, while EBITDA margins expanded by 170 bps YoY in FY24, led by better operating efficiency.”
As of March FY24, the total debt is at Rs 178.2 crore with a D/E of 0.8x. At the upper price band of Rs.389, BSRL is available at Mcap/Sales of 3.0x (FY24), which appears to be reasonably priced compared to its peers.
“Considering the rise indemand, aggressive store additions, customer retention, cluster based expansion model, and positive industry growth opportunities, we assign a ‘Subscribe’ rating on a short to medium term basis,” Anand Rathi stated.
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Another brokerage Master Capital Services Ltd also gave a ‘subscribe’ rating for the medium to long term.
“The overall lifestyle and home value retail industry in India was estimated to be Rs 6,592.11 billion accounts for approximately 54% of the total market in these categories of Lifestyle and Home. Baazar Style Retail Limited intends to take advantage of this opportunity and has already secured a share of 2.15% in the organized value retail market in Eastern India and North-Eastern India for Fiscal 2024,” it said.
“They further intend to expand profit margins and increase revenue contribution from its private labels while focusing on creating differentiation and achieving greater control over the product quality of private labels. The company also plans to strengthen its market position by increasing penetration in existing clusters, expanding its footprint in the Focus Markets, increasing focus on customer retention, and garnering brand loyalty. Investors looking to invest can invest in the IPO for the medium to long term,” Master Capital stated.
However, another brokerage firm Swastika has given a ‘Neutral’ stance on the IPO saying that the “investor may apply for listing gains”.
“While high valuation may be a deterrent, strong market demand is expected to support a positive listing. Investors may choose to prioritise listing gains, but a cautious approach is warranted due to valuation,” Swastika stated.
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Baazar Style Retail IPO: More Details
The Rs 835-crore initial public offering (IPO) will open for subscription on August 30 and conclude on September 3. The price band has been fixed at Rs 370-389 per share.
The proposed IPO is a combination of a fresh issue of equity shares worth Rs 148 crore and an offer for sale (OFS) of up to 1.76 crore valued Rs 687 crore (at the upper end of the price band) by promoter group entities and other selling shareholders.
With this, the total issue size will be Rs 835 crore at the upper and of the price band Rs 389.
Under the OFS, Rekha Jhunjhunwala, Intensive Softshare Pvt Ltd, Intensive Finance Pvt Ltd, among others, will divest their part stakes.
Proceeds from the fresh issue, to the extent of Rs 146 crore will be used for payment of debt and the remaining funds will be used for general corporate purposes.
Earlier this month, the Kolkata-based company raised Rs 37 crore from Volrado Ventures Partners Fund II in a pre-IPO placement round.
Accordingly, the fresh issue size was reduced. Bazaar Style Retail is one of the leading players in the value retail market in West Bengal and Odisha.
Additionally, its other core and focus markets include Assam, Bihar, Jharkhand, Andhra Pradesh, Tripura, Uttar Pradesh and Chhattisgarh.
Investors can bid for a minimum of 38 shares in one lot, with additional shares in multiples of 38.
Baazar Style Retail’s consolidated revenue from operations stood at Rs 972.88 crore in FY24 and profit after tax stood at Rs 21.94 crore in FY24.
Axis Capital, Intensive Fiscal Services, and JM Financial are the book-running lead managers to the issue.
