Purple United Kids is revolutionizing the fashion industry with its premium apparel and footwear offerings for kids of all age groups. The brand is known for its vibrant and versatile product range, designed to capture the attention of young fashion enthusiasts. It emphasizes confidence, strength, and style, making it a go-to brand for parents looking for high-quality, stylish clothing for their children.

The company is now going public with its IPO, targeting a fresh issue of ₹32.81 Crores by offering 26.04 Lakh shares. The price band for the Purple United Sales IPO is set at ₹121 to ₹126 per equity share, which values the company at ₹121.08 Crores at the upper price point. Retail investors are required to invest a minimum of ₹1,26,000 for 1 lot (1,000 shares), while High-Net-Worth Individuals (HNIs) need to invest a minimum of ₹2,52,000 for 2 lots (2,000 shares).

The subscription period for the Purple United Sales IPO runs from December 11 to December 13, 2024, with the allotment date expected to be finalized by December 16, 2024. The shares will be listed on the NSE SME on December 18, 2024, providing an exciting opportunity for investors looking to invest in the fast-growing children’s fashion sector.

The Grey Market Premium (GMP) of the IPO, as of December 4, 2024, is ₹9, indicating a 7.38% potential listing gain from the issue price of ₹126. However, it’s important to note that the Grey Market Premium is an unregulated, speculative indicator and should not be the sole basis for investment decisions. Investors should consider the broader fundamentals before applying.

Purple United Sales has posted strong financial performance in recent years. The company recorded revenues of ₹4,291.59 Lakhs for FY 2024, significantly increasing from ₹2,571.10 Lakhs in FY 2023. The EBITDA for FY 2024 was ₹987.19 Lakhs, up from ₹385.58 Lakhs in FY 2023, while profit after tax (PAT) was ₹481.54 Lakhs in FY 2024, showing substantial growth. These results reflect the brand’s growing presence and demand in the children’s fashion market.

In terms of valuation, the IPO is priced at a pre-issue P/E ratio of 16.07x and a post-issue P/E ratio of 25.15x, compared to the industry P/E ratio of 25.32x. The company has a Return on Capital Employed (ROCE) of 19.35% and a Return on Equity (RoE) of 27.78% for FY 2024, indicating efficient use of capital and strong profitability. This suggests that the IPO is priced fairly relative to its industry peers.

The proceeds from the IPO will be used for expanding the company’s retail footprint by opening new stores, with ₹535.40 Lakhs earmarked for this purpose. Additionally, ₹1,800.00 Lakhs will be allocated for working capital requirements, which will help support the brand’s growth and operational needs.

Given the company’s strong growth in revenue and profits, and 7.38% GMP, the Purple United Sales IPO presents a good opportunity, but investors seeking significant listing gains may find the GMP lower than expected. While the company has shown impressive financial results, investors seeking long-term growth may need to assess the sustainability of these gains in the competitive retail market.

The Upcoming IPOs in this week and coming weeks are Dhanlaxmi Corp, Jungle Camps, Toss The Coin, Sai Life Sciences, Mobikwik, Vishal Mega Mart, Supreme Facility, Purple United, Rosmerta Digital, Inventurus Knowledge and Avanse Financial.

The Current active IPO is Emerald Tyre Manufacturers.

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