Credo Brands IPO Highlights: Bidding underway on day 1 of public issue

Bennett Coleman, which owns the Times of India, offloaded more than a 4% equity stake in Credo Brands Marketing, for over ₹81 crore, a few days before the offer opened, as per Moneycontrol.

Bennett Coleman sold 25.36 lakh equity shares to ACM Global Fund VCC and 3.6 lakh equity shares to Negen Capital Services at the upper price band.

Analysts such as Swastika Investmart, Anand Rathi Research, and Sushil Finance have all given a ‘subscribe’ rating to the IPO. Sushil Finance, however, gave its rating with a ‘subscribe with caution’ recommendation.

Financially, Mufti reported an impressive CAGR (compound annual growth rate) of around 42% between FY21 and 23, with net profits doubling over the previous year and showing multifold increase compared to FY21.

‘Subscribe,’ says Dhruv Mudaraddi of Stoxbox.

"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 average P/E of 95.2x. We, therefore, recommend investors to "SUBSCRIBE" for listing gains to the issue," Mudaraddi tells Mint.

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Mint reports that as of 11:42 am on the first day, the offer has been subscribed 0.50 times; this includes retail portion that has been subscribed 0.87 times, while the NII portion has been subscribed 0.31 times.

‘Subscribe,’ says Arun Kejriwal, Founder at Kejriwal Research and Investment Services.

“…an investor can apply for the public issue as per its time horizon as it is expected to list at handsome premium and may witness buying interest post-listing. So, those who have long term perspective, can hold the scrip even after positive debut of Credo Brands Marketing shares,” he tells Mint.

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The bidding is underway on the first day of the IPO and, according to market observers, the Credo Brands Marketing shares are available at a premium of ₹126 in grey market (GMP) today.

While Muthoot Microfin offer got subscribed 82% on its first day of bidding, the Suraj Estate Developers' public issue was booked 71%. The public issue of Motisons Jewellers, meanwhile got subscribed 14.88 times.

Founded by Kamal Khushlani, Credo Brands is one of the largest homegrown brands in the country's mid-premium and premium men's casual wear market, in terms of market share in fiscal 2022.

Mufti Mesnwear, which celebrated its 25th anniversary this year, has operations in 582 cities as of March 31, 2023, provides a wide array of wardrobe solutions, with a range of products that includes shirts, t-shirts, jeans, chinos, and more

As per the company, not more than 50% of the offer shall be available to Qualified Institutional Buyers (QIBs); not less than 15% to Non-Institutional Bidders (NIBs); and and not less than 35% to retail individual bidders.

The investors will be able to bid for a minimum of 53 equity shares and in multiples of 53 equity shares thereafter. Retail investors must, therefore, need a minimum of ₹14,840 (53*280) to invest.

The price band of the offering has been fixed at ₹260- ₹280 per share and at a face value of ₹2 per equity share; the issue is entirely an offer for sale up to 1,96,34,960 equity shares.

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The issue comprises only an offer-for-sale (OFS) by the existing shareholders. Kamal Khushlani, Poonam Khushlani, Concept Communication, Bela Properties, Jay Milan Mehta and Sagar Milan are the selling shareholders in the OFS.