Purple United Sales Limited Overview
Purple United Sales is introducing a premium fashion brand for kids called Purple United Kids. Specializing in versatile apparel and footwear, the brand is designed for all age groups, offering vibrant and fashionable clothing. As a representation of confidence and strength, it aims to provide quality products for the emerging middle-class youth market in India.

The company aims to grow its retail presence and open new stores while enhancing its working capital with the proceeds of this IPO. The issue is a Book Built Offer of ₹32.81 Crores, with a fresh issue of 26.04 lakh shares priced between ₹121 and ₹126 per share.

IPO Key Details:

• IPO Size: ₹32.81 Crores (Fresh Issue)
• Price Band: ₹121 to ₹126 per share
• Market Capitalization: ₹121.08 Crores (at ₹126 per share)
• Lot Size: 1,000 shares
• Minimum Investment: ₹1,26,000 for retail investors
• Subscription Dates: December 11, 2024 – December 13, 2024
• Allotment Date: December 16, 2024
• Listing Date: December 18, 2024 (tentative)

Grey Market Premium (GMP)

As of December 11, 2024, the GMP for Purple United Sales IPO is ₹24 (19.31% potential gain). The Grey Market Premium reflects market speculation, though it should not be relied upon for making investment decisions. The GMP suggests positive short-term returns, but this can fluctuate depending on demand.

Financial Performance

Purple United Sales has demonstrated steady growth, with the following key figures from the last three fiscal years:

• Revenue: ₹4,291.59 Lakhs (FY24), ₹2,571.10 Lakhs (FY23), ₹1,656.19 Lakhs (FY22)
• EBITDA: ₹987.19 Lakhs (FY24), ₹385.58 Lakhs (FY23), ₹177.16 Lakhs (FY22)
• Profit After Tax: ₹481.54 Lakhs (FY24), ₹149.22 Lakhs (FY23), ₹240.18 Lakhs (FY22)

These figures reflect a growing brand, showing strong profit margins, and an increasing trend in revenue and profitability.

Valuation Analysis

• Pre-issue EPS: ₹7.84
• Post-issue EPS: ₹5.01
• Pre-issue P/E ratio: 16.07x
• Post-issue P/E ratio: 25.15x
• Industry P/E ratio: 25.32x

While the P/E ratio is relatively low at the pre-issue stage, it rises significantly post-issue, bringing the company's valuation closer to the industry average. The Return on Equity (RoE) for FY24 stands at 27.78%, reflecting strong profitability, while Return on Capital Employed (RoCE) is 19.35%, both favorable indicators.

Subscription Status

As of December 12, 2024, the IPO is subscribed 10.08 times on the second day of the subscription period. This shows high investor interest and is a positive indicator of potential post-listing performance.

Anchor Investor Participation

Purple United Sales has raised ₹9.34 Crores from anchor investors at ₹126 per share. This demonstrates confidence from institutional investors and further adds to the credibility of the issue.

IPO Objectives

The fresh issue proceeds will be used for the following purposes:

• ₹535.40 Lakhs for opening new stores
• ₹1,800.00 Lakhs for working capital requirements
• Remaining funds for general corporate purposes.

Investor Sentiment and Recommendation

While the Purple United Sales IPO is fairly priced and shows a positive GMP, it is worth noting that the company is operating in a niche market of kids' fashion, which may limit long-term growth potential compared to other sectors. Additionally, the IPO's relatively high P/E ratio post-issue might indicate some pricing risks.

For short-term listing gains, investors could consider subscribing due to the strong GMP and positive market sentiment. However, long-term investment prospects appear uncertain, given the size of the market and potential competitive pressures.