Stanley Life IPO and itemizing: Time to get off the cos(tl)y sofa?

Stanley Life Ltd (SLL), the maker and retailer of luxurious furnishings, listed on the bourses in the present day at ₹499. The problem value on the higher band was ₹369. This interprets to an inventory achieve of 35.2 per cent. This itemizing achieve might be seen within the context of an total bullish sentiment prevailing out there, marked by Nifty making all-time highs this week.

The shares of SLL after opening at ₹499 on BSE, had made a excessive of ₹510 within the first hour itself, earlier than cooling right down to a low of ₹470.25. The inventory bounced from there and closed at ₹474 for the day.

In our evaluation of the IPO printed in our bl.portfolio version dated June 23, 2024 , we had beneficial that buyers wait and look ahead to a few quarters, earlier than taking the decision to enter the inventory.

Although SLL is properly poised to capitalise on its vertically built-in operations, its market management and tailwinds akin to the luxurious housing market upcycle and the Authorities’s push in direction of import substitution, the inventory at its problem value of ₹369 was richly valued at 84 instances annualised 9M FY24 EPS.

• Additionally learn: Stanley Life makes robust inventory market debut, however falls in need of expectations

At in the present day’s shut of ₹474, the PE ratio works out to 107.9 instances, which greater than adequately components the long run enterprise prospects within the value.

Nonetheless, a flat income progress anticipated for FY24, and dangers represented by dependence on the long-term sustainability of the luxurious housing market cycle, inherent enterprise dangers (akin to income loss resulting from relocation of shops in previous yr) and focus of income to the south of the nation don’t appear to be priced in.

In our IPO evaluation acknowledged above, we had iterated to attend and watch if the corporate posts numbers that may justify such a lofty valuation in its upcoming earnings releases. We reiterate the identical now for buyers seeking to enter the inventory. And for buyers who have gotten allotment within the IPO, we advocate them to lock within the positive aspects, because the risk-reward is much more unfavourable now than it was pre-listing.

For extra insights, try our earlier evaluation right here.