The initial public offering (IPO) of Rekha Rakesh Jhunjhunwala-backed Bazaar Style Retail opens for bidding today, that is, on Friday, August 30. The company will be offering its shares in the range of Rs 370-389 per share. Investors can bid for a minimum of 38 equity shares and its multiples thereafter, until Tuesday, September 3.
Bazaar Style Retail is a fashion retailer operating in West Bengal and Odisha. It offers apparel for men, women, boys, girls, and infants and general merchandise such as non-apparels and home furnishing products. It focuses on providing a family-oriented shopping experience, offering quality products and striving to offer every Indian stylish merchandise at an affordable price.
The Rs 834.68 crore-IPO of Bazaar Style Retail includes a fresh shares sale of Rs 148 crore and an offer-for-sale of (OFS) up to 1,76,52,320 shares by its promoters and existing shareholders including Rekha Rakesh Jhunjhunwala, Intensive Softshare, Intensive, Chandurkar Investments, Madhu Sunara, Sabita Agarwal, Subroto Trading & Finance , Rajnish Gupta, Rekha Kedia and others.
The net proceeds from the issue shall be utilized towards prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company and general corporate purposes. The company, in consultation with managers of the issue, undertook a pre-IPO placement of Rs 37 crore, resulting in reduction of fresh issue size to Rs 148 crore.
Ahead of its IPO, Baazar Style Retail raised Rs 250.1 crore via anchor investor as it allocated 64.29 lakh shares at Rs 389 apeice to them. Its anchor book included names like Ashoka India Equity Investment Trust Plc, Volrado Venture Partners Fund IV Gamma, HSBC Global, Allianz Global, Al Mehwar Commercial, Heliox, Natixis International Funds, 3P India, Julius Baer and more.
Incorporated in 2013, Baazar Style Retail stores averaged 9,046 square feet and were staffed by trained employees to enhance customer experience as of March 31, 2024. The company operates in Odisha, Bihar, Assam, Jharkhand, Andhra Pradesh, Uttar Pradesh, Tripura, and Chhattisgarh. It has expanded across 9 states and operates 162 stores as of March 31, 2024.
Baazar Style Retail reported a net profit of Rs 21.94 crore with a revenue of Rs 982.83 crore for the financial year ended on March 31, 2024. The company's grey market premium (GMP) stood at Rs 130-135 per share, suggesting gains of about 34 per cent over the upper end of the price band.
Baazar Style Retail has reserved shares worth Rs 1 crore for the eligible employees of the company, who will get a discount of Rs 35 per share. 50 per cent of the net offer has been reserved for the qualified institutional bidders (QIBs), while retail investors will have 35 per cent of the allocations. Remaining 15 per cent of the net off shall go to non-institutional investors (NIIs).
Axis Capital, JM Financial and Intensive Fiscal Services are the book running lead managers of the Baazar Style Retail IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE, with Friday, September 6 as the tentative date of listing. Here's what a host of brokerage firms said about the IPO of Bazaar Style retail:
DRChoksey FinServ Rating: Subscribe Baazar Style is a leading value fashion retailer in Eastern India. Its cluster-based expansion model has proven effective by rapidly adding new stores near existing ones to boost operational efficiency and market presence. A significant focus on expanding private label offerings has driven growth, said DR Choksey FinServ.
"Investments in supply chain optimization and operational improvements have given the company a competitive edge. By maintaining its focus on the value retail segment and expanding its online presence, Baazar Style Retail is well-positioned to capture a larger share of the growing Indian retail market," it added with a 'subscribe' rating for the IPO.
StoxBox Rating: Subscribe Bazaar Style Retail has achieved substantial growth. This expansion has enabled it to capture significant market share in West Bengal and in Odisha in the organized value retail sector. The company’s cluster-based expansion strategy has been instrumental in its recovery from the pandemic. Net profit also grew substantially, said StoxBox in its note.
"The company commands a high valuation with a P/E ratio of 124 times at the upper price band based on FY24 earnings. However, given the company's efforts to enhance its financial performance, increase profitability through private labels, and expand market penetration, we suggest a 'subscribe' rating for the issue," it added.
Nirmal Bang Securities Rating: Subscribe for long term Rating: BSRL enjoys good market share in the states of WB and Odisha backed by its focus to grow in Tier3 and Tier 4 cities. The company over the years has built strength in understanding and creating affordable products for its customers and has garnered customer stickiness, said Nirmal Bang Securities.
"Going forward, BSRL plans to derive growth from existing core markets as well as target other focused markets. While on a P/E basis of 135 times FY24 earnings, the issue looks expensive, however; on EV/Ebitda basis of 21.5 times FY24 earnings, it looks reasonable versus industry average of 28 times. Thus, we are recommending ‘subscribe’ to the issue for long term gains," it said.
Arihant Capital Markets Rating: Subscribe for listing gains Baazar Style is set for strong growth and profitability by expanding its private label segment, which constituted 37.93% of revenue in FY24. Strategic store expansion, with a 23.62 per cent CAGR, targets high-growth areas and enhances market presence, said Arihant Capital Markets.
"Investment in advanced processes and automation ensures operational efficiency, while targeted marketing and customer retention strategies boost brand loyalty and revenue growth. At the upper band, the issue is valued at a P/E ratio of 132 times, based on a FY24 EPS of Rs 2.94. We are recommending a 'subscribe' for this issue," it said.
Swastika Investmart Rating: Subscribe with caution Bazaar Style Retail was the fastest-growing value retailer between 2017 to 2024. It showed improvement in margins and growth in both its top and bottom lines. The IPO's P/E valuation is on the higher side, said Swastika Investmart in its IPO note.
"While high valuation may be a deterrent, strong market demand is expected to support a positive listing. Investors may choose to prioritize listing gains, but a cautious approach is warranted due to valuation," it added.
Geojit Financial Services Rating: Subscribe for long term Baazar Style Retail (BSRL) enjoys a healthy mix of private label (currently owns 10 brands) and third-party brands offered in their stores. Revenue from sale of private label brands has grown at a CAGR of 64.57 per cent over FY22-FY24. It has achieved repeat customer purchases of 72 per cent in FY24 , indicating a high degree of customer stickiness, said Geojit Financial Services.
"BSRL is available at Mcap/sales of 3 times (FY24), which appears to be reasonably priced compared to its peers. Considering the rise in demand, 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," it said.