Baazar Style Retail IPO subscribed 10x on Day 3 so far; HNI portion booked over 31 times

The initial public offering (IPO) of Baazar Style Retail continued to attract a decent response from the investors during the third and final day of the bidding process. The Rekha Jhunjhunwala-backed issue was subscribed a little more than 70 per cent on day one and ended day two with 4.6 times bidding.
 

The Baazar Style Retail is selling its shares in the price band of Rs 370-389 apiece. Investors can apply for a minimum of 38 shares and its multiples thereafter. It is looking to raise Rs 834.68 crore via IPO, which includes a fresh share sale of Rs 148 crore, and an offer-for-sale (OFS) of up to 1.76 crore equity shares.
 

According to the data, the investors made bids for 15,53,76,262 equity shares, or 10.34 times, compared to the 1,50,30,116 equity shares offered for the subscription by 1.15 pm on Tuesday, September 03. The three-day bidding for the issue, which opened on Friday, August 30, concludes today.
 

The allocation for non-institutional investors (NIIs) was subscribed 31.44 times, while the portion reserved for retail investors saw a subscription of 6.37 times. Employee portion was booked about 29.18 times. However, the quota set aside for qualified institutional bidders (QIBs) quota was subscribed 1.51 times as of the same time.
 

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.
 

The grey market premium of Baazar Style Retail has seen a sharp correction amid the rising volatility in the broader markets. Last heard, the company was commanding a premium of Rs 65 per share in the unofficial market, suggesting a listing pop of about 17 per cent for the investors. However, the premium in the grey market stood around Rs 125 on the first day of the bidding.
 

Brokerages are mostly positive on the issue suggesting investors to subscribe to it for a long term citing their market share, solid growth, operationally efficiency, strong management experience and push for its own labels. However, a major OFS portion, regional concentration in a single region and rich valuations are the key concerns for the company.
 

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, it plans to derive growth from existing core markets as well as target other focused markets. It revenues grew at a CAGR of 33 per cent during FY22-24,The issue looks expensive, however; on EV/EBIDTA basis of 21.5x FY24 earnings, it looks reasonable vs industry average of 28x and thus we are recommending ‘Subscribe’ to the issue for long term gains," it added.
 

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 apiece to them. 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.
 

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).
 

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," said BP Equities with a 'subscribe' rating for the issue, considering growth prospects and strategic initiatives.
 

JM Financial, Axis Capital 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.