Stanley Lifestyles likely to debut with 40% gains, say experts

Stanley Lifestyles IPO listing

Super-premium and luxury furniture maker Stanley Lifestyles shares are likely to open with more than 40 percent gains on June 28, given the optimism in the secondary market and strong response to its IPO, experts said.

The initial public offering of Bengaluru-based company was subscribed 96.98 times during June 21-25, with investors buying 99.32 crore equity shares against offer size of 1.02 crore shares. Qualified institutional buyers provided the major support amongst the participants, bidding 222.1 times the portion set aside for them, followed by non-institutional investors (high networth individuals) who bought 119.52 times the allotted quota, while retail investors picked 19.21 times the reserved portion.

The firm has mobilised Rs 537.02 crore through its maiden public issue at upper price band, comprising Rs 200 crore via fresh issue component and the remaining Rs 337.02 crore from offer-for-sale. The price band for the offer was Rs 351-369 per share.

"We expect a listing at around Rs 540-550 per share, resulting in a listing gain of around 46-49 percent over the issue price of Rs 369 per share," Amit Goel, Co-Founder & Chief Global Strategist at Pace 360 said.

Stanley Lifestyles, the fourth largest player in the home furniture segment in India in terms of revenue in FY23, is widely recognised as "Stanley” into designing and manufacturing super-premium, luxury and ultra-luxury furniture industry.

Akriti Mehrotra, Research Analyst at StoxBox, also believes the stock is set to make a strong market debut on Friday, anticipating to open with a premium of 40 percent to 45 percent over the issue price.

The stock traded at more than 40 percent premium over the issue price in the grey market, the market observers said.

Financially, Stanley has shown impressive revenue growth driven by its premium offerings tailored for high-end consumers. In fact, it is among the top players in the high-end, luxurious furniture segment. After a setback in FY21, it marked steady growth in its top and bottom lines between FY22 and FY23.

Revenue from operations increased at a CAGR of 46.29 percent during FY21-FY23 to Rs 419 crore and was Rs 313.3 crore in the nine months ended December 2023. Profit after tax during the same period (FY21-FY23) grew at a CAGR of 326.5 percent to Rs 35 crore in Fiscal 2023, and was Rs 18.7 crore in 9MFY24.

The company's EBITDA margin improved from 15.2 percent in FY21 to 19.7 percent in FY23, and was at 18.4 percent in 9MFY24. Return on capital employed (ROCE) has risen from 5.52 percent in FY21 to 16.63 percent in FY23 and return on equity (ROE) from 1 percent to 16.3 percent during the same period.

By December 2023, Stanley Lifestyles operated 38 'company owned and company operated’ (COCO) stores in the major metro-cities, and 24 ‘franchisee-owned and franchisee-operated’ (FOFO) stores in 21 cities in India. It intends to establish 24 new stores between FY25 and FY27.

The company is going to utilise net fresh issue proceeds for opening of new stores and anchor stores, and renovation of existing stores. Further, it will use money for purchase of new machinery and equipment, and general corporate purposes.

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