Stanley Lifestyles IPO Analysis – Subscription Status

Stanley Lifestyles Ltd, a renowned super-premium and luxury furniture brand in India, has initiated its Initial Public Offering (IPO) today, open for subscription until June 25th. With an aim to raise Rs 537.02 crore, the IPO includes a fresh issue worth Rs 200 crore and an Offer for Sale (OFS) of up to Rs 337.02 crore.

The price band for the IPO is set at Rs 351-369 per equity share. Investors can bid in lots, with each lot consisting of 40 shares. To apply for the IPO, the minimum investment is set at Rs 14,760 (calculated as 40 x 369).

According to market observers, shares of Stanley Lifestyles Ltd are currently trading at a grey market premium (GMP) of Rs 162. The public offer is anticipated to debut on BSE and NSE on the 28^th of June, 2024.

Stanley Lifestyles IPO Subscription Status

By 2 p.m. on the first day of bidding, the IPO of Stanley Lifestyles Ltd was subscribed 0.78 times. The Retail segment saw a subscription of 1.12 times, and the Non-Institutional Investors segment was subscribed 1.02 times. However, the Qualified Institutional Buyer segment had not yet received any subscriptions.

About Stanley Lifestyles Ltd

Known for its luxurious and super-premium furniture, Stanley operates two manufacturing facilities in Bengaluru and retails through 38 company-owned and 24 franchisee-owned stores across India. It stands out as India's largest super-premium furniture brand with a ~6.25% market share and triple the retail footprint of its closest competitor in the luxury segment.

Financial and Market Strengths

Exceptional Growth: Stanley's operational revenue has seen a Compound Annual Growth Rate (CAGR) of 46% from FY21 to FY23, with EBITDA growing 67% and net profit soaring 326%.

Stanley Lifestyles Net Profit

Robust Fundamentals: Stanley boasts strong cash flows, minimal debt, and an impressive net profit margin, which is one of the highest among leading Indian furniture companies.
Dividend Distribution: Reflecting its solid financial health, Stanley has consistently paid dividends, with substantial increases year over year.

Concerns to Consider

Regional Concentration: With around 77% of revenue derived from Southern India, there's a potential risk if regional market dynamics change.
Product Dependency: Stanley’s significant reliance on sofas and recliners, which contribute over 50% of revenue, could affect overall performance if consumer preferences shift.

IPO Valuation and Growth Prospects

Despite an aggressive P/E ratio of 84x based on FY24 earnings projections, Stanley's expansion plans to grow its store network and diversify product offerings present compelling long-term growth opportunities.

Final Thoughts: A Strategic Long-Term Investment

Stanley Lifestyles has exhibited remarkable revenue and EBITDA growth, propelled by its expanding retail network. From FY21 onward, there has been a notable improvement in both gross and EBITDA margins, with gross margins increasing by 100 basis points to 51.2%.

Looking forward, Stanley is set to broaden its product lineup and plans to increase its store count to over 100 in the next 3-4 years. While the current valuation may offer limited upside for short-term investors, Stanley offers substantial growth opportunities for those with a long-term investment horizon.

For a deeper dive into this IPO, explore: IPO Corner on Liquide

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