Stanley Lifestyles raises ₹161 crore from anchor investors, IPO opens today

Furniture maker Stanley Lifestyles has raised ₹161.10 crore from anchor investors ahead of its initial public offering that opens for public subscription today. The Bengaluru-based company has allocated 43.66 crore equity shares to anchor investors at upper end of the initial public offering (IPO) price band of ₹369 per share on June 20, 2024.

The anchor book saw participation from foreign as well as domestic institutions such as SBI Mutual Fund, SBI AF, Nippon MF, HDFC MF, East Spring Investment India, Quant MF, SBI Life Insurance, Loomis and Sayles, Optimix Wholesale Global Emerging Markets Emerging Markets Share Trust, Franklin India Opportunities Fund, Bandhan MF, Motilal Oswal MF, Max Life, Aditya Birla SunLife Insurance, and Meru Investment fund.

As per the exchange data, out of the total allocation, 26.77 lakh equity shares, or 61.32% of the total anchor book size, were allocated to 7 domestic mutual funds through 8 schemes amounting to ₹98.78 crore.

Stanley Lifestyles looks to raise ₹537.02 crore at the upper end of the price band of ₹351-369 per equity share. The offer consists of a fresh issue of ₹200 crore of the face value of ₹2 apiece and an offer for sale up to 9,133,454 equity shares by promoters and other selling shareholders. Investors can bid for a minimum of 40 equity shares and in multiples thereafter.

As per the IPO document, the company has reserved 50% of the offer for qualified institutional buyers, up to 15% for non-institutional bidders, and remaining 35% for retail individual bidders.

Anand Rathi Research Team has recommended “SUBSCRIBE – long term” rating to the IPO, saying that at an upper band, company is richely priced at price-to-earning (P/E) ratio of 60x post issue of equity shares on FY23 earning basis and the company has no listed peers. “We believe that company has a scope of business improvement on the back of industry tailwinds, brand recall and business scalability,” it says in a report.

The brokerage in its report says that the company’s ability to address customer requirements, and a diversified product portfolio, have resulted in being consistently profitable over the last 10 years. The return on capital employed (ROCE) was 5.52%, 12.90%, 16.63% and 8.63% (calculated on an unannualised basis), as of March 31, 2021, 2022 and 2023 and as of December 31, 2023, respectively, while return on net worth (RONW) was 0.56%, 10.69%, 15.18% and 8.34% as of March 31, 2021, 2022 and 2023 and as of December 31, 2023, respectively.

Established in 2007, Stanley Lifestyle is a super-premium and luxury furniture brand in India, selling products under the “Stanley” brand. It is primarily engaged in the design, production and sale of seating products majority of which can be customized in various configurations such as 4-seater or 3-seater sofas, leg options and upholstery options such as Scandinavia Max, Euro Nappa / Tuscana Nova Cashmere / Poach Molba.

As of December 31, 2023, Stanley operated 38 “company owned and company operated” (COCO) stores all located in the major metro-cities of Bengaluru, Chennai, New Delhi, Mumbai and Hyderabad, all operated by their Subsidiaries and 24 “franchisee-owned and franchisee-operated” (FOFO) stores in 21 cities across 11 States and Union Territories in India. The company operates 2 manufacturing facilities located at Electronic City, Bengaluru (Karnataka) and Bommasandra Jigani Link Road, Bengaluru (Karnataka).

As of January 30, 2024, their retail presence in India was 4 times the size of their nearest competitor in the luxury/super-premium furniture industry.

Axis Capital Limited, ICICI Securities Limited, JM Financial Limited, and SBI Capital Markets Limited are the book-running lead managers. The Company’s equity shares are proposed to be listed on the BSE and NSE.