Baazar Style Retail IPO: Rekha Jhunjhunwala-Backed Public Issue Subscribed 3x On Day 2; Check GMP

The initial public offering (IPO) of Baazar Style Retail Limited has captured the attention of the Indian primary market since its launch last week. This IPO, which is backed by the well-known investor Rekha Jhunjhunwala, remains open for subscription until Tuesday, 3rd September 2024. With just two days left for investors to participate, the IPO has already shown promising signs, drawing substantial interest from various investor segments.

Baazar Style Retail Limited has set the price band for its IPO at Rs 370 to Rs 389 per equity share, aiming to raise a total of Rs 834.68 crore through this public offer. The IPO is a combination of a fresh issue and an Offer for Sale (OFS). The company plans to generate Rs 148 crore through the fresh issuance of shares, while Rs 686.68 crore is expected to be raised via the OFS route.

After just one day of bidding, the Baazar Style Retail IPO subscription status revealed that the mainboard issue was already 72% subscribed. This strong initial response sets a positive tone for the remaining days of the subscription period. As of 1:06 pm on the second day of bidding, the IPO had garnered even more interest, with the overall subscription reaching 2.80 times the issue size. Breaking it down further, the retail segment was subscribed 2.61 times, the Non-Institutional Investors (NII) portion was filled 5.95 times, and the Qualified Institutional Buyers (QIB) segment saw a subscription rate of 71%.

The grey market premium (GMP) for Baazar Style Retail IPO has been particularly encouraging. As of today, the shares of Baazar Style Retail are trading at a premium of Rs 94 in the grey market. This indicates a potential listing gain of around 24% for the allottees, reflecting strong demand and positive sentiment among investors.

Baazar Style Retail has demonstrated strong financial growth in recent years, which has contributed to the strong investor interest in its IPO. The company's net profit saw a surge from Rs 5.1 crore in FY2023 to Rs 22 crore in FY2024. This growth in profitability has been accompanied by a steady improvement in EBITDA margins, which rose from 10.9% in FY2021 to 14.6% in FY2024. The company's efficient use of retail space has also been a key factor in its success, with sales per square foot increasing from Rs 5,226 to Rs 7,758 over the past four years.

Rekha Jhunjhunwala, a prominent investor known for her strategic investments, is a key figure in this IPO. According to the Red Herring Prospectus (RHP) of Baazar Style Retail IPO, Jhunjhunwala has offered 27,23,120 equity shares under the OFS route. The total value of her offered shares amounts to approximately Rs 106 crore, making her one of the largest individual shareholders participating in the offering. Her involvement adds considerable credibility to the IPO and has likely contributed to the strong demand witnessed so far.

Baazar Style Retail plans to utilize the net proceeds from the IPO primarily for the prepayment or repayment of certain outstanding borrowings. This move will help the company strengthen its balance sheet and reduce interest costs, thereby improving profitability. Additionally, a portion of the funds will be allocated for general corporate purposes.

Baazar Style Retail has emerged as a leading player in the value retail segment in India, with a growth trajectory that sets it apart from its peers. According to its RHP report, the company has been the fastest-growing value retailer in India from 2017 to 2023, surpassing competitors such as V2 Retail Limited and V-Mart Retail Limited in both store count and revenue.

From a modest beginning with just two stores in Fiscal 2014, Baazar Style Retail has expanded rapidly, operating 153 stores across 140 cities by December 2023. This represents a compound annual growth rate (CAGR) of 59.68%, a testament to the company's aggressive expansion strategy and its ability to tap into the growing demand for value retail in India. The majority of its stores operate under the 'Style Bazaar' brand, covering over 1.39 million square feet of retail space.

With its financial performance, strong backing from Rekha Jhunjhunwala, and aggressive expansion strategy, Baazar Style Retail's IPO presents a compelling investment opportunity. The positive grey market signals and the early subscription success further reinforce the attractiveness of this IPO. As the subscription period draws to a close, investors will be watching the final subscription numbers and the grey market activity.