Davin Sons Retail Limited is set to raise ₹8.78 crores through its Fixed Price IPO of 15.96 lakh equity shares. The subscription window for this IPO opens on January 2, 2025, and closes on January 6, 2025, with the share allotment scheduled for January 7, 2025. The IPO shares are expected to list on the BSE SME platform on January 9, 2025.

The company has priced its IPO at ₹55 per equity share, placing the market capitalization at ₹28.94 crores at the issue price. The lot size is 2,000 shares, with a minimum investment required of ₹1,10,000 for retail investors and ₹2,20,000 for High Net-Worth Individuals (HNIs). Davin Sons Retail is a dual-segment business involved in garment manufacturing and FMCG distribution, two industries with strong growth potential.

IPO Subscription and Grey Market Premium

The live subscription status on the final day indicates a 114.79x subscription, showcasing significant demand for the IPO. The Grey Market Premium (GMP) for the Davin Sons Retail IPO is currently ₹8, which implies a listing gain of 14.54%. While the GMP shows promising returns, investors should note that the Grey Market Premium is speculative and based on unofficial trading in the market, not representing the actual listing price.

Financial Performance and Key Metrics

Davin Sons Retail's revenue from operations for the fiscal year 2024 stood at ₹1,339.16 lakh, showing consistent growth from the previous year. The EBITDA for the same period was ₹388.49 lakh, with a Profit After Tax (PAT) of ₹164.05 lakh, signaling a steady financial performance over the years. The company’s pre-issue EPS stands at ₹4.63, while the post-issue EPS is ₹3.12, indicating moderate dilution after the IPO.

The P/E ratio of 11.88x pre-issue and 17.64x post-issue places the IPO at a reasonable valuation, with an industry average P/E ratio suggesting fair pricing. The company’s Return on Capital Employed (ROCE) for FY24 stands at an impressive 54.52%, and the Return on Equity (ROE) is 49.41%, underlining the business’s efficient use of capital.

Objectives of the IPO

The funds raised from the Davin Sons Retail IPO will be utilized for capital expenditure (₹136 lakh) to purchase a warehouse, financing working capital requirements (₹420 lakh), and general corporate purposes (₹189.80 lakh). These initiatives will help the company strengthen its infrastructure and expand operations, potentially contributing to long-term growth.

Conclusion and Recommendations

The Davin Sons Retail IPO presents a strong investment opportunity, particularly for those interested in the garment manufacturing and FMCG distribution sectors. While the listing gains indicated by the GMP are attractive, it is advisable to approach this IPO with a focus on long-term growth potential rather than short-term speculation. The company’s solid financial metrics, including a high ROE and ROCE, support its promising outlook.

Given the 114x subscription, which reflects strong investor interest, we suggest potential investors exercise caution and base their decision on the company’s long-term growth story. For those looking for quick listing gains, the 14.54% potential might seem appealing, but long-term investors should consider the company’s sustainable business model and market position.

The Upcoming IPOs in this week and coming weeks are Sat Kartar Shopping,Barflex Polyfilms.

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