Stanley Lifestyles IPO opens for bidding today; should you invest or not?

Stanley Lifestyles' initial public offering (IPO), aiming to raise Rs 537.02 crores is set to open for subscription on Friday, 21 June, 2024. The IPO of the luxury furniture manufacturer comprises a fresh issue of 0.54 crore shares amounting to Rs 200.00 crores and an offer for sale of 0.91 crore shares amounting to Rs 337.02 crores.

Stanley Lifestyles raised Rs 161.11 crore from anchor investors on June 20. SBI Consumption Opportunities Fund, Nippon Life India Trustee, HDFC Mutual Fund and Quant Mutual Fund were among the top anchor investors who bid for the IPO. 

The company is a premium and luxury furniture brand in India, and is ranked as the 4th largest player in the home furniture segment in India in terms of revenue in fiscal year 2023.

The net proceeds of the IPO are proposed to be used  for opening new stores and updating the existing ones and for capital expenditure requirements. 

Here are the detailed particulars of Stanley Lifestyles IPO:

Stanley Lifestyles IPO key dates

The subscription opens on June 21, 2024, and closes on June 25, 2024. The allotment is scheduled to be finalised by Wednesday, June 26, 2024. The stock is expected to list on both BSE and NSE with a tentative listing date set for Friday, June 28, 2024.

Stanley Lifestyles IPO price bands, lot size

The company has fixed its IPO price band at Rs 351 to Rs 369 per share. The minimum lot size for an application is 40 shares, necessitating a minimum investment of Rs 14,760 for retail investors. For sNII, the minimum investment is 14 lots (560 shares), totaling Rs 206,640, and for bNII, it is 68 lots (2,720 shares), amounting to Rs 1,003,680.

Stanley Lifestyles IPO GMP

According to Chittorgarh IPO, the latest grey market premium (GMP) for Stanley Lifestyles is Rs 162. With a price band of Rs 369, the projected listing price for the IPO is Rs 539, indicating an anticipated listing gain of 43.9 per cent per share.

Stanley Lifestyles IPO financials

In FY23, Stanley Lifestyles saw a 43.05 per cent rise in revenue to Rs 425.62 crore from Rs 297.76 crore in FY22. Its profit after tax (PAT) also increased by 50 per cent to Rs 34.9 crore in FY23, up from Rs 23.2 crore in FY22.

Stanley Lifestyles IPO share allotment

The IPO allocates up to 50 per cent of shares for Qualified Institutional Buyers (QIBs), at least 35 per cent for retail investors, and a minimum of 15 per cent for Non-Institutional Investors (NIIs).

Stanley Lifestyles IPO lead book runners

Axis Capital Limited, ICICI Securities Limited, JM Financial Limited, and SBI Capital Markets Limited are the book running lead managers for the IPO, while KFin Technologies Limited will serve as the registrar for the issue.

Post the IPO, the company will have a price to earnings valuation of 84.4 times with an earning per share of Rs 4.37. So, should you bid?

Here’s what key brokerages recommend

Anand Rathi

On the valuation front, at an upper band, the company is richly priced at P/E of 60x post issue of equity shares on FY23 earning basis, the company has no listed peers, analysts at Anand Rathi said in a note. 

They believe that the company has a scope of business improvement on the back of industry tailwinds, brand recall and business scalability. Thus, recommending  subscribing to the IPO for the long term. 

SBI Securities

According to those at SBI Securities, Stanley is well placed to encash on the healthy growth opportunity in the premium furniture market.

Industry growth for the luxury/super-premium furniture and home goods market is set to grow at a CAGR of 34 per cent from $ 1.5 billion to $4.8 billion between F23-FY27 period. 

Further, Stanley Lifestyles plans to spend Rs 90 crore to open 24 new stores between FY25–FY27, will significantly contribute to the company’s topline, analysts said. The brokerage, however, did not give a rating to the issue.  

Reliance Securities

Reliance Securities said that the company 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. 

“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,” brokerage said in an IPO note. 

Sushil Finance

According to those at Sushil Finance, the company is asking for a PE multiple of 57.93x on the upper end of the price band and a PE of 72.35x annualising diluted EPS for 9MFY24 (Rs 3.83). 

The P/BV is at 8x as at 9MFY24. Looking at all the factors, risks, opportunities and a slightly high valuation, the brokerage recommended applying to the issue with a long-term view.