The initial public offering (IPO) of Stanley Lifestyles kicks-off for bidding on Friday, June 21 and can be subscribed until Tuesday, June 25. The furniture maker is offering its shares in the fixed price band of Rs 351-369 apiece and interested investors can apply for the issue bidding for a minimum of 40 equity shares and its multiples thereafter.
Stanley Lifestyles, which was founded in 2007, designs and manufactures super-premium, luxury and ultra-luxury furniture and sells it through its brand 'Stanley'. Its product range includes categories like seating; wooden cased products; kitchen and cabinet; beds and mattresses; and automotive products.
The Rs 537.02 crore IPO of Stanley Lifestyles included a fresh share sale of Rs 200 crore and an offer-for-sale (OFS) of up to 91,33,454 equity shares by its promoters and existing shareholders including Sunil Suresh, Shubha Sunil, Oman India Joint Investment Fund II, Kiran Bhanu Vuppalapati, Sridevi Venkata Vuppalapati.
Stanley Lifestyles has mobilised Rs 161.1 crore from 16 anchor investors with allocation of 43,66,051 shares at Rs 369 apiece. Eastspring Investments India, Natixis International Funds, Franklin India SBI Mutual Fund (MF), Nippon Life India, HDFC MF, Quant MF, Bandhan MF, SBI Life Insurance, Motilal Oswal MF, Aditya Birla Sun Life and Max Life participate in the anchor book.
As of December 31, 2023, Stanley Lifestyles operate 38 company-owned and company-operated' (COCO) stores, located in the major metropolitan cities of Bengaluru, Chennai, New Delhi, Mumbai, and Hyderabad, and 24 franchisee-owned and franchise-operated (FOFO) stores in 21 cities across 11 Indian states and Union Territories.
Bengaluru-based Stanley Lifestyles' product development department is spread over approximately 15,000 square feet at its manufacturing city in Bengaluru, Karnataka and the company had 778 employees as of December 31, 2023.
Stanley Lifestyles reported an net profit of Rs 18.70 crore with a revenue of Rs 322.29 crore for the nine months ended on December 31, 2023. Its bottomline stood at Rs 34.98 crore with a revenue of Rs 425.62 crore for the financial year 2022-23.
Stanley Lifestyles has reserved 50 per cent of the issue for the qualified institutional bidders (QIBs), while non-institutional investors have 15 per cent of the net offer. Remaining 35 per cent of the net offer shall be allocated towards retail investors.
ICICI Securities, Axis Capital, JM Financial and SBI Capital Markets are the book running lead managers of the Stanley IPO, while Kfin Technologies is the registrar for the issue. Shares of the company will be listed on both BSE and NSE, with Friday, June 28 as the tentative date of listing. Here's what a host of brokerage firms say about the IPO of Stanley Lifestyles IPO:
Anand Rathi Research
Rating: Subscribe
Stanley Lifestyles is a super-premium and luxury furniture brand in India and among the few home-grown super premium and luxury consumer brands in India operating at scale in terms of manufacturing as well as retail operations. They are the fourth largest player in the home furniture segment in India in terms of revenue in Fiscal 2023, said Anand Rathi Research.
"On the valuation front, at an upper band, the company is richly priced at P/E of 60 times post issue of equity shares on FY23 earning basis, the company has no listed peers. We believe that the company has a scope of business improvement on the back of industry tailwinds, brand recall and business scalability," it added with a 'subscribe for long term' rating for the issue.
Reliance Securities
Rating: Subscribe
Stanley ranks among the few home-grown super-premium and luxury consumer brands in India operating at scale in terms of manufacturing as well as retail operations. It has evolved its products over the last few years operating at a significant scale while maintaining such a high level of profitability covering the mass, luxury and ultra luxury segments, said Reliance Securities.
"With improved lifestyle, growing number of households, second homes trend will continue to drive growth and the management is committed to expand market share and increase customer base over the next few years. Hence we recommend a 'subscribe' to the issue," Reliance added.
Indsec Research
Rating: Subscribe
The IPO is valued at an annualized FY24 PE of 79.8 times. Stanley does not have an exact peer for comparison. Stanley Lifestyles is engaged in the business of manufacturing and retailing premium and luxury home furnishing. Over FY 21-23, its revenue has grown at a CAGR of 46.3 per cent driven by increase in retail sales and store expansion, said Indsec.
"Ebitda and PAT have grown at a CAGR of 67 per cent and 465 per cent, respectively for FY21-23. For the next 2-3 years. The management expects to grow revenue by 20-25 per cent, however the focus is more on profit growth. On an annualized FY24 basis, ROE and ROCE stands at 11 per cent and 16.8 per cent, respectively," it added, assigning a 'subscribe' rating to the IPO.
SMIFS
Rating: Subscribe
Stanley is the largest in terms of number of stores and total different types of luxury products offered amongst peers and the fastest in terms of revenue growth. We recommend a subscribe to the issue, as it is poised to benefit from the growth in the luxury, premium products segment as the company with no probable listed peers in the Indian market and largest product offerings, said SMIFS.
"We recommend a subscribe to the issue, as a good long term investment as the new store additions done over the last 2-3 years combined with the new store additions in the years to come nearly trebles the company's presence coupled with very strong industry growth rates," added.
Arihant Capital Markets
Rating: Subscribe for listing gains
Stanley Lifestyles is positioned for continued expansion and dominance in the sector. The industry dynamics seem positive with increasing demand for premium and luxury furniture, said Arihant Markets in its IPO note.
"The renovation and expansion of 'Stanley Level Next', 'Stanley Boutique' and 'Sofas & More by Stanley' would bring additional business going forward. At the upper band of Rs 369, the issue is valued at PE of 84.4 times based on FY24 TTM EPS of Rs 4.4. We are recommending 'subscribe for listing gains' for this issue," it said.
StoxBox
Rating: Subscribe
The luxury and super-premium furniture segment, comprising 8 per cent of the overall market, is expanding due to the rise in dual-income households and the preferences of urban millennials and Gen Z for quality and trendy décor. Stanley, as a market leader, stands to benefit from these trends, supported by impressive CAGR in revenue, Ebitda and PAT, said StoxBox.
"Stanley's return on equity (ROE) has shown steady improvement, rising from 1 per cent in FY21 to 16.3 per cent in FY23. The company commands a high valuation at a P/E of 57.9 times based on FY2023 earnings. However, considering the industry dynamics and growth prospects, we recommend a Subscribe rating for the issue," it added.
Sushil Finance
Rating: Subscribe with caution
Stanley will expand product portfolio and evaluate and increase presence in the B2B segment as well as enter into distribution arrangements. More than 50 per cent of the business is dependent on sofas and recliners. The company’s revenue is highly concentrated from South India, said Sushil Finance in its IPO note.
"They are dependent on a limited number of suppliers for the supply of leather, one of the primary raw materials. Looking at all the factors, risks, opportunities and a slightly high valuation, investors can apply with a long-term view" it added.
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