Is Baazar Style Retail IPO Good or Bad - Detailed Analysis

Baazar Style Retail Limited is kicking off its initial public offering which will be open from August 30, 2024, to September 3, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether Baazar Style Retail IPO is good or bad, whether it is worth investing in Baazar Style Retail IPO, and so on. In this article, we will cover a few details about Baazar Style Retail IPO to better analyze its IPO.

Baazar Style Retail IPO - Company Overview

Incorporated in June 2013, Bazaar Style Retail Limited is a fashion retailer with operations primarily in West Bengal and Odisha. The company offers a wide range of apparel for men, women, boys, girls, and infants, along with general merchandise, including non-apparel items and home furnishings.

Bazaar Style Retail Limited is committed to delivering a family-oriented shopping experience, emphasizing quality products at affordable prices for every Indian. As of March 31, 2024, the company’s stores, which average 9,046 square feet, are staffed by trained employees to enhance the customer experience.

The company's operations extend across Odisha, Bihar, Assam, Jharkhand, Andhra Pradesh, Uttar Pradesh, Tripura, and Chhattisgarh. By March 31, 2024, Bazaar Style Retail Limited has expanded to 162 stores across 9 states. The following table will give you the store count in each of the states the company operates in:

The company boasts an in-house marketing team of 13 professionals and a robust design and merchandising team of 57 experts. These teams leverage their extensive experience in the retail and textile industries to understand and cater to the regional preferences of their target customers, ensuring they offer the latest market trends.

The company owns a market share of  3.03% and 2.22% in the value fashion retail and organized value retail market, respectively in the states of West Bengal and Odisha. Furthermore, the company was one of the fastest-growing value retailers in terms of both store count and revenue from operations from FY17 to FY24, when compared to V2 Retail Limited and V-Mart Retail Limited

Baazar Style Retail IPO- Revenue Breakup

Figures mentioned in Rs. crores

From the above table, you can see that nearly half of the revenue generated by the company is from its retail stores situated in West Bengal. However, the remaining core markets have shown a steady rise its revenue attributing to a collective CAGR growth of 29.5%.

Furthermore, the focus markets, including Jharkhand, Andhra Pradesh, Tripura, Uttar Pradesh, and Chhattisgarh, have shown even more impressive growth, with a combined CAGR of 67.5%. Overall, the company's total revenue from operations has increased from Rs.551.12 crores in FY22 to Rs. 972.88 crores in FY.24, reflecting a CAGR of 32.9%.

Baazar Style Retail IPO- Financial Overview

If we take a look at the financials of Baazar Style Retail, we can see that the company’s revenue from operations has shown an increase from Rs. 551.12 crores in FY22 to Rs. 972.88 crores in FY24. 

During the same duration, the company was able to make a turnaround from losses and reported a net profit of Rs. 21.94 crores. However, the total margins that were retained from the revenue were only 2.23%. This is mainly attributed to the company’s high cost while purchasing the stock.

Furthermore, the company reported an ROE of 10.74% and an ROCE of 18.39% in FY24. These returns are below average as the company is incurring high operational costs. On a positive note, the company has reported the Working Capital Days at 8.89 days which means the company has a fast turnover of inventory. 

Baazar Style Retail IPO - Industry Overview 

As per the reports of Technopak, India’s value retail in the apparel segment was estimated to stand at Rs. 3,72,170 crores in FY24. This market is further estimated to grow at a CAGR of 13.9% from FY23 to FY27 and is expected to reach a market size of Rs.5,34,125 crores.

As of FY24, the market size of the Value Retailing industry (lifestyle and home) in the eastern and north-eastern states of India is estimated to be at Rs.1,41,748 crores. Currently, the markets for Value Retail are the fastest growing among the consumer markets with an expected market size of Rs.2,20,802 crores and is further anticipated to grow at a CAGR of 15.9% from FY24 to FY27.

Baazar Style Retail IPO - Peer Comparison

The table is the comparison of Baazar Style Retail with the listed industry peers as of FY24:

From the table above, we can observe that while V-Mart Retail Limited has a negative EPS, indicating losses, V2 Retail Limited has a better EPS than Baazar Style Retail. However, both Baazar Style Retail and V2 Retail have comparable RONW, suggesting that despite the difference in earnings per share, their efficiency in generating returns on shareholders' equity is at a similar level.

Baazar Style Retail IPO Details

Baazar Style Retail IPO Date

The IPO of Baazar Style Retail is open to subscription from August 30, 2024, to September 3, 2024. The shares will be allocated to investors on September 04, 2024, and the company will be listed in the NSE and BSE on September 06, 2024

Baazar Style Retail IPO Issue Price

Baazar Style Retail is offering its shares in the price band of Rs.370 to Rs.389 apiece. This means you would require an investment of Rs.14,782 per lot (38 shares) if you are bidding for the IPO at the upper price band.

Baazar Style Retail IPO Size

The company is offering a total of 21,456,947 shares, amounting to Rs.834.68 Crores. Out of these, 3,804,627 shares worth Rs.148 Crores are offered through a fresh issue, and 17,652,320 shares worth Rs.686.68 Crores are offered through an offer for sale.

Is Baazar Style Retail IPO a Good or Bad Investment? Final Thoughts

The Baazar Style Retail IPO offers a compelling opportunity for investors, particularly those interested in the fast-growing value retail segment. While the company has demonstrated robust revenue growth, efficient working capital management, and strong market positioning in key regions, it should be noted that the profit margins are currently thin. Furthermore, investors should also weigh the risks associated with operational costs and market competition of the company.

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