Baazar Style Retail Limited IPO: Check IPO Date, Lot Size, Price & Details

About the Baazar Style Retail IPO:

Baazar Style Retail Ltd. (BSRL) is a prominent value fashion retailer with a market share of 3.03% in West Bengal and 2.22% in Odisha within the organized value retail market, according to the Technopak Report. Between 2017 and 2024, BSRL was recognized as the fastest-growing value retailer in terms of both store count and operational revenue, outperforming V2 Retail Limited and V-Mart Retail Limited. In Fiscal 2024, BSRL held the largest retail footprint in Eastern India compared to its listed competitors, according to the Technopak Report. As of March 31, 2024, the company operated 162 stores across 146 cities, covering more than 1.47 million square feet, with most stores under the ‘Style Bazaar’ brand. Over time, BSRL has built a strong brand identity with ‘Style Bazaar’, offering a wide range of products that have fostered strong customer loyalty and brand recognition. The company’s product offerings are divided into two main categories: apparel and general merchandise. In the apparel segment, BSRL provides clothing for men, women, boys, girls, and infants. The general merchandise segment includes non-apparel items and home furnishings. BSRL primarily targets aspiring middle-class households, aiming to deliver a family-oriented shopping experience with quality products at affordable prices. By focusing on a family-centric shopping experience, BSRL has established itself as a one-stop destination for the entire family’s needs, offering a diverse product range at competitive prices. Reflecting the strength of its product portfolio, the company reported an Average Transaction Value of Rs. 1,039 in Fiscal 2024, Rs. 1,041 in Fiscal 2023, and Rs. 1,026 in Fiscal 2022. The Fiscal 2024 transaction value was the second-highest among listed value retailers in India.

IPO Details:

The objectives of the fresh issue:

The company intends to utilize the net proceeds from the fresh issue towards funding the following objects:

• Repayment of certain outstanding borrowings availed by the company and
• General corporate purposes.

Key Strengths and Opportunities:

• Baazar Style Retail Ltd. (BSRL) surpassed other listed value retailers from 2017 to 2024, achieving a 35.8% compound annual growth rate (CAGR) in the store count as indicated by the Technopak report. By March 31, 2024, BSRL had extended its operations to nine states, operating 162 stores. During this period, BSRL also led in revenue growth, with a CAGR of 26.8%, outpacing its competitors. The company believes the rapid expansion was due to its business model, which emphasized cluster-based growth, strategically chosen high-street locations, a broad selection of quality merchandise, strong market penetration in key regions, and a diverse product range. This strategy has been instrumental in solidifying BSRL’s presence across Eastern India.
• Baazar Retail Limited has leveraged its strong understanding of customer preferences to offer a carefully curated and affordable product mix, leading to high customer loyalty. The company's product portfolio spans apparel and general merchandise, including cosmetics, imitation jewelry, consumer appliances, houseware, and bags. Their apparel offerings cover a wide range, from shirts and t-shirts to ethnic wear and accessories, catering to men, women, children, and youngsters. BSRL's deep knowledge of local markets has enabled them to tailor their product assortment to meet regional demands effectively. The company also strategically incorporates private label brands, which account for a significant portion of revenue, allowing greater quality control and product differentiation.
• Baazar Retail Limited plans to strengthen its market position by deepening penetration in existing clusters and expanding its footprint in key markets. The company aims to increase focus on customer retention and brand loyalty while continuing to open new stores in Core and Focus Markets with high growth potential. By expanding its presence in these areas, BSRL expects to boost revenue and enhance profit margins. The company also intends to consolidate its market position by strategically opening stores in high-demand areas, supported by thorough market research. This expansion is expected to be guided by a cluster-based approach, using a scorecard system that evaluates factors like location, accessibility, population, competition, and market potential.

Risks:

• Baazar Retail Limited’s stores are primarily located in the eastern regions of India, which poses a risk. In FY24, 87% of the total revenue was generated from the core markets. Any negative developments in these areas could significantly impact the company’s revenue and overall performance.
• The company’s business is primarily concentrated in the apparel segment, which accounted for 84% of total revenue in FY24. This focus poses a risk due to the rapidly changing nature of customer preferences. The company’s performance depends on its ability to anticipate and respond to these shifts by sourcing new products, collaborating with different suppliers, and aligning with evolving fashion trends and customer demands. Although Baazar Retail has successfully expanded its customer base in the past, there is no guarantee that its target customers won’t shift their preferences towards promotional deals offered by competitors, which could impact future growth and revenue.
• Baazar Retail Limited adopts a cluster-based expansion model when opening new stores, strategically situating them in the same or nearby districts where existing stores are already operational. This approach has brought benefits such as improved supply chain and inventory management, increased brand visibility, optimized marketing costs, and efficient use of human resources. However, this strategy also poses a risk by concentrating the business in a limited geographic area. The proximity of stores within a cluster could potentially result in competition among them, reducing individual store sales. If this model fails or leads to decreased sales, it could negatively impact the company’s revenue, financial condition, and overall operations.

Financial Snapshot:

Conclusion:

Baazar Style Retail Limited has displayed consistent revenue, PAT, and EBITDA growth. The company comes at an earnings valuation of 124x based on its EPS as of March 31, 2024, and the upper price band. In comparison, its listed peer, V2 Retail Limited exhibits a PE ratio of 109x as of August 27, 2024. Hence, the issue appears to be over-priced. Considering the robust financials, industry growth prospects, and risks associated with the company, we advise the investors to consider subscribing to this IPO solely for listing gains.