Baazar Style Retail IPO Listing: Stock lists flat at IPO price
Baazar Style Retail IPO Listing
Baazar Style Retail IPO Listing: A Comprehensive Overview
Baazar Style Retail, a prominent player in the value fashion retail sector, recently launched its Initial Public Offering (IPO) to raise ₹834.68 crore.
The IPO was open for subscription from August 30 to September 3, 2024. Today marks the listing of its shares on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
This detailed overview provides insights into the IPO’s performance, investor reception, and the company’s background and financial health.
IPO Subscription and Initial Performance
The Baazar Style Retail IPO was met with considerable enthusiasm from investors, reflected in its high subscription levels. The total IPO was oversubscribed by more than 40 times, indicating robust interest. Breaking this down:
- Qualified Institutional Buyers (QIBs): The portion allocated to QIBs saw an impressive subscription rate of 81.83 times. This segment of investors includes institutional entities such as mutual funds, insurance companies, and foreign institutional investors, which usually indicates confidence in the company’s future prospects.
- Non-Institutional Investors (NIIs): This category, which encompasses high-net-worth individuals (HNIs) and other non-institutional investors, subscribed to the IPO 59.41 times.
- Retail Investors: Retail investors, who typically make up a significant portion of the subscription, subscribed 9.07 times.
- Employee Share Allocation: Employees were allocated shares at a discounted price, leading to a subscription rate of 35.08 times for this segment.
The shares of Baazar Style Retail were issued at ₹389.00. On the first day of trading, the shares made their debut at ₹389.00 on both the BSE and NSE, showing no immediate listing gain.
This stable opening might reflect cautious optimism among investors, given the company’s strong pre-IPO performance metrics.
However, as the trading session progressed, the shares experienced a notable increase, reaching ₹430.95 on the BSE.
By the end of the first trading day, the stock closed at ₹399.65, representing a modest gain of 2.74% from the IPO price.
For employees, the IPO offered an additional advantage, with each share available at a discounted price of ₹354, translating to a ₹35 discount per share.
This provision is designed to reward and retain key personnel, further aligning their interests with those of the shareholders.
IPO Structure and Utilization of Funds
The Baazar Style Retail IPO involved two main components:
- Fresh Issue of Shares: The IPO included the issuance of new shares worth ₹148.00 crore. The proceeds from this fresh issue will primarily be allocated towards repaying existing debt and financing general corporate activities. This strategic allocation is expected to enhance the company’s financial stability and flexibility, supporting its growth plans and operational efficiency.
- Offer for Sale (OFS): An OFS component comprised 1,76,52,320 shares with a face value of ₹5 each. Among these, 27,23,120 shares were sold by Rekha Jhunjhunwala, a well-known investor with a significant stake in the company. The funds from the OFS will be received by the selling shareholders, while the company itself will benefit indirectly by enhancing its market liquidity and investor base.
Company Background and Market Position
Baazar Style Retail is a key player in the value fashion retail market, with a notable presence in the organized retail sector.
The company holds a 3.03% market share in West Bengal and 2.22% in Odisha. It operates primarily under the Style Bazaar brand and offers a wide range of apparel and general merchandise.
As of March 2024, Baazar Style Retail operates 162 stores across 146 cities. This extensive retail footprint positions the company as a leading value retailer in East India.
According to a Technopak report, Baazar Style Retail has surpassed other listed value retailers such as V2 Retail and V-Mart Retail in terms of retail footprint in the region.
This competitive advantage underscores the company’s strong market positioning and growth potential.
Financial Performance and Growth Metrics
Baazar Style Retail’s financial performance has shown remarkable growth over recent years. For FY24, the company reported a profit of ₹21.9 crore, marking a 4.3-fold increase from ₹5.1 crore in FY23.
This substantial growth in profitability reflects the company’s successful business strategies and operational efficiency.
Revenue for the same period grew by 23.5%, reaching ₹972.9 crore. This increase in revenue highlights the company’s effective market penetration and sales performance.
The company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) also saw a significant rise, growing by 40% to ₹142.2 crore.
The EBITDA margin expanded by 170 basis points to 14.6%, indicating improved cost management and profitability.
The company’s strong financial performance is supported by its strategic focus on value fashion retail, which appeals to a broad consumer base seeking affordable yet fashionable products.
Baazar Style Retail’s ability to expand its retail network and enhance its market share in East India further reinforces its growth trajectory.
Future Outlook and Strategic Plans
Looking ahead, Baazar Style Retail aims to leverage the funds raised through its IPO to bolster its market presence and operational capabilities.
The repayment of debt will strengthen the company’s balance sheet, providing more flexibility for future investments and expansion initiatives.
The company is also expected to continue focusing on expanding its retail footprint, both in existing markets and potentially in new regions.
By enhancing its product offerings and maintaining competitive pricing, Baazar Style Retail is well-positioned to capitalize on growth opportunities in the value fashion sector.
Final Remarks
Baazar Style Retail’s IPO marks a significant milestone in its journey, reflecting strong investor interest and a positive market reception.
While the initial listing showed a stable debut, the subsequent rise in share price and overall positive performance indicate confidence in the company’s future prospects.
With a solid financial foundation, an extensive retail network, and a strategic focus on growth, Baazar Style Retail is poised for continued success in the value fashion retail sector.
