Davin Sons Retail Limited IPO presents a promising opportunity for investors in the garment and FMCG sectors. The company is engaged in manufacturing high-quality garments, including denim fabrics, jeans, jackets, and t-shirts, catering to well-known brands. Additionally, it operates in the FMCG industry, offering one of the largest long-term sustainable business opportunities in India. The IPO is a fixed price offering amounting to ₹8.78 Crores, consisting entirely of a fresh issue of 15.96 Lakh shares at an offer price of ₹55 per share.

The IPO opens for subscription from January 02, 2025, and closes on January 06, 2025. Retail investors can apply for a minimum of 2,000 shares, totaling ₹1,10,000. High-net-worth individuals (HNIs) are required to invest for a minimum of 2 lots (4,000 shares), amounting to ₹2,20,000. The market capitalization at the upper price band is expected to be ₹28.94 Crores.

Davin Sons Retail Business Overview

The company is divided into two key segments:

1. Garment Manufacturing: The company produces and designs readymade garments, such as denim jackets, jeans, and t-shirts, for various brands.
2. FMCG Distribution: It is also a part of the growing FMCG sector, distributing products that cater to the daily needs of consumers.

Financials and Performance Metrics

For the financial year ending September 30, 2024, Davin Sons Retail recorded ₹634.10 Lakh in revenue, reflecting a steady growth trajectory compared to ₹391.33 Lakh in 2023. The EBITDA for the same period stands at ₹153.40 Lakh, up from ₹86.16 Lakh in FY 2023, and ₹388.49 Lakh in FY 2024, showing healthy operational leverage.

The Profit After Tax for the year ending September 30, 2024 is ₹73.59 Lakh, showcasing an increase over previous periods. The company’s pre-issue EPS stands at ₹4.63, and the post-issue EPS is expected to be ₹3.12 for FY24. The pre-issue P/E ratio is 11.88x, which is on the lower end compared to the sector average, indicating that the IPO is fairly priced. The company also boasts an impressive ROCE of 54.52% and ROE of 49.41%.

Grey Market Premium (GMP)

As of January 2, 2025, the GMP for the Davin Sons Retail IPO was ₹8, indicating an expected listing gain of 14.54%. This signifies potential demand for the IPO, but it's important to remember that GMP is unregulated and can fluctuate based on market conditions. The Grey Market Premium offers a rough estimate of possible listing gains, but investors should always rely on proper market dynamics for decision-making.

IPO Subscription and Allotment Status

By January 3, 2025, the Davin Sons Retail IPO had been subscribed 11.95 times on its second day, showing strong interest from investors. The allotment status will be declared on January 7, 2025, and investors can check their status through the registrar’s website by entering their application number or PAN number.

Objectives of the IPO

Davin Sons Retail intends to use the proceeds from the IPO for several purposes:

1. ₹136.00 Lakh will be used to purchase a warehouse to support future growth.
2. ₹420.00 Lakh will be used for working capital requirements, ensuring smooth business operations.
3. ₹189.80 Lakh will be utilized for general corporate purposes.

Recommendation and Conclusion

Given the financial performance and IPO valuation, Davin Sons Retail IPO presents an opportunity to invest in a growing garment and FMCG player. However, the pre-issue P/E ratio of 11.88x suggests that the IPO is fairly priced. The expected listing gain of 14.54% based on GMP is moderate. We recommend caution for investors looking to apply for listing gains, as market conditions can always affect real-time stock performance.

The Upcoming IPOs in this week and coming weeks are Indobell Insulation, Standard Glass Lining, Quadrant Future, Capital Infra Trust, Delta Autocorp, Avax Apparels and B R Goyal.

The Current active IPO are   Fabtech Technologies, Davin Sons and Parmeshwar Metal.

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