Mufti Menswear brand owner Credo Brands Marketing was subscribed 2.12 times at the end of Day 1. The public issue was subscribed 3.34 times in the retail category. The QIB segment got 0.01 times subscribed while NII category was subscribed 2.07 times by 6 pm on Day 1.
The issue is on till December 21 and 19,634,960 shares are on offer. The price band is between Rs 266- 280 per share. The issue offers 6,872,236 shares to retail investors, 3,926,992 shares to qualified institutional buyers and 2,945,244 shares to non-institutional investors. This offer only comprises of offer-for-sale (OFS) by promoters and investors.
The company aims to raise around Rs 550 crore from the issue and the fund raised will be used in expansion and setting up new Mufti showrooms across the country.
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The Grey market
A look at the dynamics of the men’s apparel market indicates that it is likely to post strong growth and the estimates range around 18% CAGR by FY27. This kind of projection no doubt sets the stage for a favourable playing ground for Credo. A strong brand equity, diverse product range and scalable asset-light business model are some of the positives for Mufti-parent Credo Brands Marketing
Credo Brands Marketing: Subscribe or not?
The question therefore is should you subscribe to the issue? Stoxbox, part of the research team of BP Equities, indicate that one can subscribe to this issue given the valuation dynamics. According to them, “the IPO offers a competitive P/E ratio of 23.2x times based on FY23 EPS, reflecting reasonable pricing, especially considering the impressive earnings growth rate and an industry
However, the analysts also highlighted the risks involved. According to them, “the company
-Operates in a highly competitive market with many international brands
-The brand is specifically focused on men’s casual wear, abrupt change in men’s consumer preference can significantly impact the brand
-Just like any other organised retail business, the company is at risk of having unsold inventory.”