S D Retail operates in the business of designing, manufacturing, outsourcing, marketing, and retailing sleepwear under the brand name “SWEET DREAMS.” This sleepwear-focused company offers a wide portfolio of stylish and comfortable sleepwear for the entire family, celebrating the transition from work to home life and catering to every aspect of downtime.

IPO Details

The S D Retail IPO is a Book Built Issue amounting to ₹64.97 Crores, consisting of a Fresh Issue of 49.6 Lakh shares. The subscription period is from September 20, 2024, to September 24, 2024. Allotment results are expected to be finalized on or about September 25, 2024, with shares listed on the NSE SME on a tentative date of September 27, 2024.

The share price band for the IPO is set between ₹124 to ₹131 per equity share, with a minimum lot size of 1,000 shares. Retail investors must invest a minimum of ₹131,000, while High-Net-Worth Individuals (HNIs) are required to invest a minimum of 2 lots (2,000 shares), totaling ₹262,000.

BEELINE CAPITAL ADVISORS PRIVATE LIMITED serves as the book-running lead manager, and KFIN TECHNOLOGIES LIMITED is the registrar for the issue. Spread X Securities Private Limited acts as the sole Market Maker for the S D Retail IPO.

Market Sentiment and GMP

As of 12:12 PM on September 23, 2024, the S D Retail Limited IPO has a subscription status of 3.79 times on its second day. The Grey Market Premium (GMP) is currently estimated between ₹5 to ₹10, indicating potential listing gains of 5% to 10%. However, trading based on GMP is unregulated, and these figures should only be viewed as educational and informational.

Financial Performance

S D Retail has showcased robust growth in its revenue streams. The revenues from operations for the fiscal years 2024, 2023, and 2022 were ₹16,328.48 lakhs, ₹13,568.86 lakhs, and ₹12,873.65 lakhs, respectively. The EBITDA for these years was ₹1,334.80 lakhs, ₹760.85 lakhs, and ₹1,363.21 lakhs, indicating solid operational performance.

The Profit After Tax (PAT) figures for these years were ₹759.76 lakhs, ₹430.17 lakhs, and ₹1,011.06 lakhs, reflecting a positive trend in profitability.

For the S D Retail IPO, shares are offered at a pre-issue EPS of ₹5.52 and a post-issue EPS of ₹4.05. The pre-issue P/E ratio stands at 23.73x, while the post-issue P/E ratio is 32.34x. The company's Return on Capital Employed (ROCE) is 15.61%, and the Return on Equity (ROE) is 6.29% for FY24, suggesting that the IPO is fairly priced compared to its peers.

Use of IPO Proceeds

The proceeds from the S D Retail IPO will be allocated for the following purposes:

₹1648.85 Lakhs for capital expenditure to set up new exclusive brand outlets (EBOs).

₹3500.00 Lakhs for funding working capital requirements.

General corporate purposes.

Conclusion and Recommendation

Given the company's established brand presence in the sleepwear segment, its solid financial performance, and the expected Grey Market Premium, investors should approach the S D Retail IPO with caution. While the potential for listing gains is indicated, it is advisable for investors to avoid this IPO for significant gains or long-term investment due to its relatively high P/E ratio compared to industry benchmarks.

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