Davin Sons Retail Limited, a dual-segment business focused on garment manufacturing and distribution of FMCG products, is offering an IPO that raises ₹8.78 crores through a fresh issue of 15.96 lakh shares. The IPO opened on January 2, 2025, and will close on January 6, 2025. The shares are priced at ₹55 per equity share, giving the company a market capitalization of ₹28.94 crores. The Grey Market Premium (GMP) for the IPO is ₹8, indicating an expected listing gain of 14.54%. The shares are expected to be listed on the BSE SME on January 9, 2025.

IPO Price, Subscription, and Allotment

The price band for the Davin Sons Retail IPO is set at ₹55 per share, with a lot size of 2,000 shares. Retail investors must invest a minimum of ₹1,10,000, while High-Net-Worth Individuals (HNIs) need to invest in two lots, amounting to ₹2,20,000. As of January 3, 2025, the IPO has been subscribed 5.89 times, reflecting strong interest from investors. The allotment date for the IPO is January 7, 2025, and investors can check the allotment status on the registrar's website.

Financial Performance and Valuation

Davin Sons Retail’s business is split between garment manufacturing—specializing in jeans, denim fabrics, denim jackets, and t-shirts for other brands—and FMCG distribution. The company is led by experienced promoters Mr. Mohit Arora and Mr. Nohit Arora, who have been involved in garment design and manufacturing for over a decade.

The revenue from operations for the period ending September 30, 2024, was ₹634.10 lakh, while the EBITDA stood at ₹153.40 lakh. The Profit after Tax (PAT) for FY24 was ₹73.59 lakh, demonstrating a consistent growth trajectory. The pre-issue EPS is ₹4.63, with a post-issue EPS of ₹3.12. The pre-issue P/E ratio is 11.88x, which is lower than the post-issue P/E ratio of 17.64x, suggesting that the IPO is priced reasonably.

The company's ROCE for FY24 stands at 54.52%, and the ROE is 49.41%, showcasing strong returns. With a RoNW of 29.58%, the company appears financially healthy and well-positioned in its sectors.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for Davin Sons Retail IPO is currently ₹8, which indicates an expected listing gain of 14.54%. While GMP is an unofficial indicator of investor sentiment, it is important to understand that no official trading takes place based on GMP before the listing. The GMP is determined by supply and demand in the unregulated grey market, and investors should be cautious when relying on it for investment decisions.

IPO Use of Proceeds

Davin Sons Retail plans to utilize the net proceeds from the IPO for the following purposes:

1. ₹136.00 Lakh to finance the purchase of a warehouse.
2. ₹420.00 Lakh to meet working capital requirements.
3. ₹189.80 Lakh for general corporate purposes.

Should You Invest in Davin Sons Retail IPO?

The Davin Sons Retail IPO presents a mixed investment opportunity. The company has shown consistent financial growth, with increasing revenues and profits. The IPO is fairly priced based on its current valuation metrics, making it attractive for long-term investors seeking exposure to the garment manufacturing and FMCG sectors.

However, considering the expected listing gain of 14.54%, investors should carefully evaluate whether they seek short-term listing gains or long-term growth. The GMP indicates strong market interest, but the post-issue P/E ratio of 17.64x might suggest a higher valuation than some might be comfortable with.

Given the GMP and company fundamentals, we suggest investors avoid the Davin Sons Retail IPO if they are solely seeking listing gains but could consider the company for long-term growth, especially if you are confident in the growth prospects of the garment and FMCG sectors.

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

The Current active IPO is   Fabtech Technologies, Leo Dry Fruits, Davin Sons, and Parmeshwar Metal.

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