The mainboard IPO of a luxury furniture brand company is a book-building issue of ₹537.02 crore, comprising a fresh issue and an offer-for-sale.
The Bengaluru-based furniture maker raised over ₹161.10 crore from anchor investors on Thursday ahead of its initial public offering.
Stanley Lifestyles is a super-premium and luxury furniture brand in India involved in manufacturing and retail operations.
Experts point out that in FY23, it was the fourth-largest revenue-generating player in the home furniture segment in India.
Stanley Lifestyles is among the first few Indian companies in the super-premium and luxury furniture segment and one of the few Indian companies present across various price points, such as super-premium, luxury and ultra-luxury segments, through its various brands.
Here are ten key points about Stanley Lifestyles and its IPO:
1. Stanley IPO details
A book-built issue of ₹537.02 crores, Stanley Lifestyles IPO combines a fresh issue and an offer-for-sale (OFS) by its promoters and shareholders. It comprises a fresh issue of ₹200 crore and an OFS of 91,33,454 shares, aggregating to ₹337.02 crore.
The promoter-selling shareholders under the OFS are Sunil Suresh and Shubha Sunil, who will offload up to 11.82 lakh shares each. The investor-selling shareholders are Oman India Joint Investment Fund II, which will sell 5,544,454 shares in the OFS, Kiran Bhanu Vuppalapat, who will sell 10 lakh equity shares, and Sridevi Venkata Vuppalapati, who will sell 2.25 lakh shares.
Axis Capital Limited, ICICI Securities Limited, JM Financial, and SBI Capital Markets are the book-running lead managers of Stanley IPO. KFin Technologies Limited is the issue’s registrar.
With a price band set at ₹351-369 per share, the IPO opened for subscription on Friday, June 21 and will close on Tuesday, June 25.
Up to 50 per cent of the offer is reserved for qualified institutional buyers (QIBs), 15 per cent is allocated to non-institutional bidders, and at least 35 per cent is for retail investors.
Share allotment is expected to be finalised on Wednesday, June 26, and they could be listed on the BSE and the NSE on Friday, June 28.
2. Stanley IPO subscription status
Stanley IPO saw a cumulative subscription of 1.44 times on Day 1, receiving bids for 1,47,04,520 shares against 1,02,41,507 offered.
The retail and non-institutional investors (NIIs) segments were fully subscribed, while the QIB portion saw a decent demand.
According to exchange data, the NIIs segment saw a subscription of 2.01 times, receiving bids for 44,81,760 shares against 22,24,719 offered. On the other hand, the retail segment witnessed a subscription of 1.81 times, receiving bids for 93,81,920 shares against 51,91,011 offered. The QIB portion was subscribed 0.30 times, with a bid for 8,40,840 shares against 28,25,777 offered on Day 1.
3. Shareholding pattern
After the issue, the promoter and promoter group’s shareholding in the company will drop to 56.81 per cent from 67.36 per cent earlier.
On the other hand, the stake of the public and employees will increase to 43.19 per cent from 32.64 per cent earlier.
4. Objects of the fresh issue
The company intends to use the net proceeds to open new stores under the formats of “Stanley Level Next”, “Stanley Boutique”, and “Sofas & More by Stanley”.
Some of the net proceeds will be used to renovate existing stores under the formats of “Stanley Level Next,” “Stanley Boutique,” and “Sofas & More by Stanley.”
They also want to open some anchor stores.
5. The company’s finances
The company’s revenue has seen a sustained rise since FY21. According to the company’s RHP (red herring prospectus), its revenue from operations for FY21 stood at ₹195.78 crore, which rose to ₹292.20 crore in FY22. For 2023, the company earned ₹419 crore in revenue from operations. For the first nine months of FY24, the company’s revenue from operations stood at ₹313.31 crore.
Profit for FY21, FY22 and FY23 stood at ₹1.03 crore, ₹21.35 crore and ₹32.9 crore, respectively. For nine months of FY24, the company’s profit was ₹19.8 crore.
6. Competitive strength
Experts point out that Stanley Lifestyles is the largest and fastest-growing luxury and super-premium furniture brand in India.
“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 and the largest in terms of the number of stores and the fastest in terms of revenue growth growing brand in the furniture segment,” said HDFC Securities.
HDFC pointed out that the company’s extensive pan-India retail presence across various store formats allows it to target various markets, ensuring enhanced brand visibility. As of January 31, 2024, it has the largest retail outlet network offering luxury furniture products in India. It retails its furniture products primarily through its three store formats, each catering to different segments of the market, such as ultra-luxury, luxury, and super-premium.
7. Industry overview
The furniture industry is a complex ecosystem which involves multiple stakeholders and a dynamic supply chain.
From raw material suppliers to furniture manufacturers, retailers, distributors, designers, and customers, each stakeholder plays a crucial role in the design, production, distribution, and sale of furniture products.
HDFC Securities observed approximately 45000+ furniture manufacturers in India, according to a 2021 report by the Indian Furniture Manufacturers Association (IFMA).
“The boom in the real estate market in India has enabled the furniture market in India to experience a high growth trajectory. Rapid urbanisation, high-rising incomes, and an increasing shift towards tier-level cities are causing housing properties to flourish across India,” said HDFC Securities.
According to the brokerage firm, the luxury, super-premium furniture and home goods market is poised to triple its size by FY27, reaching $4.8 billion.
8. The company’s key management
Sunil Suresh, 58, is the managing director of the company. He has been with the company as a promoter and a director since October 11, 2007. Before the incorporation of the company, he was associated with Stanley Seating, which manufactured car seat leather upholstery.
Shubha Suni, 49, is the full-time director. She holds a certificate of completion of the INSEAD leadership programme for senior executives. She has been associated with the company as a promoter and director since October 11, 2007. Before the incorporation of the company, she was associated with Stanley Seating, which manufactured car seat leather upholstery.
As per the company’s RHP, except for Sunil Suresh and Shubha Sunil who are spouses and Sonakshi Sunil, who is their daughter, none of the company’s directors, key managerial personnel and senior management personnel are related to each other.
9. Key risks
The company does not own the brand name “Stanley”, registered in the name of one of its promoters, Sunil Suresh.
The company’s business is highly dependent on selling sofas and recliners. According to the RHP, variations in demand and changes in consumer preference for our sofa and recliner products could hurt its business, results of operations and financial condition
Besides, the company does not have any listed industry peers in India or abroad, and it may be difficult to benchmark and evaluate its financial performance against other operators operating in the same industry.
A substantial portion of its stores are located in southern India, and any adverse developments affecting its operations in these regions could hurt its business.
10. Stanley Lifestyles GMP
Stanley Lifestyles IPO’s last grey market premium (GMP) is ₹165, according to investorgain.com. Considering the upper price band of the issue at ₹369, Stanley Lifestyles IPO’s estimated listing price is ₹534, a premium of 44.72 per cent.
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
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Published: 22 Jun 2024, 08:47 AM IST