Purple United Kids, a premium fashion brand, offers a wide range of apparel and footwear choices for children across all age groups. Known for its vibrant products, the brand has quickly become a symbol of confidence, strength, and fashion for kids. Purple United Sales is now launching its IPO to raise ₹32.81 Crores, consisting entirely of a fresh issue of 26.04 lakh shares. The subscription period for the IPO opens on December 11, 2024, and closes on December 13, 2024. The allotment is expected to be finalized by December 16, 2024, with the tentative listing date scheduled for December 18, 2024 on the NSE SME.

The price band for the IPO is set between ₹121 to ₹126 per share, and the market capitalization at the upper price band is estimated at ₹121.08 Crores. The lot size for the IPO is 1,000 shares, with retail investors required to invest a minimum of ₹1,26,000. For High-Net-Worth Individuals (HNIs), the minimum investment is ₹2,52,000 for two lots (2,000 shares).

The IPO has attracted Grey Market Premium (GMP) attention, with an expected premium of ₹9, indicating potential listing gains of about 7.38%. However, investors should note that the GMP is purely speculative and not a reliable metric for price discovery. Real trading happens only once shares are listed on the exchange, and the GMP is based on unregulated market demand and supply.

The proceeds from the IPO will be utilized for several key objectives:

• ₹535.40 Lakhs will be used to open new stores.
• ₹1,800 Lakhs will go toward working capital requirements.
• The remaining funds will be used for general corporate purposes.

Financial Performance:
For the fiscal years ending 2024, 2023, and 2022, Purple United Sales has demonstrated strong growth:

• Revenue from operations for FY24 stood at ₹4,291.59 Lakhs, up from ₹2,571.10 Lakhs in FY23 and ₹1,656.19 Lakhs in FY22.
• EBITDA for FY24 was ₹987.19 Lakhs, a substantial increase from ₹385.58 Lakhs in FY23 and ₹177.16 Lakhs in FY22.
• Profit After Tax (PAT) was ₹481.54 Lakhs for FY24, compared to ₹149.22 Lakhs in FY23 and ₹240.18 Lakhs in FY22.
  
  

  The Upcoming IPOs in this week and coming weeks are Dhanlaxmi Corp, Jungle Camps, Toss The Coin, Purple United, Rosmerta Digital and Avanse Financial.

  The Current active IPO is Nisus Finance and Emerald Tyre Manufacturers.

The company’s pre-issue earnings per share (EPS) is ₹7.84, with a post-issue EPS of ₹5.01. The pre-issue P/E ratio is 16.07x, while the post-issue P/E ratio is 25.15x, which is close to the industry’s average P/E ratio of 25.32x. Additionally, the company has a Return on Capital Employed (ROCE) of 19.35% and a Return on Equity (RoE) of 27.78% for FY24, indicating efficient use of capital and strong profitability.

While these financial metrics suggest the IPO is fairly priced, the relatively high post-issue P/E ratio may indicate limited room for immediate growth. The GMP of ₹9 implies potential listing gains, but it is important to be cautious since Grey Market Premium is speculative and not guaranteed.

In conclusion, while Purple United Kids IPO shows solid financials and growth potential, it is fairly priced for long-term investment. Given the GMP and market expectations, we recommend cautious consideration for those seeking potential listing gains, but it may not be the best choice for long-term investors.

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