SD Retail Limited made a remarkable market debut on the NSE SME, listing its shares at ₹145, which is an impressive 11% premium over its IPO price. The ₹65 crore IPO was open for subscription from September 20 to September 24, 2024, and it attracted significant interest, being oversubscribed by a staggering 97 times. This high level of interest from investors underscores the growing demand for quality sleepwear, particularly under the well-regarded brand SWEET DREAMS.

The company specializes in designing, manufacturing, outsourcing, marketing, and retailing sleepwear, catering to a diverse clientele that values both style and comfort. The brand SWEET DREAMS offers a wide range of sleepwear options, making it a family-friendly choice that helps transition from work to home life. The unique selling proposition of SD Retail lies in its commitment to provide stylish and comfortable sleepwear that caters to every aspect of downtime.

The subscription period for the S D Retail IPO was marked by impressive figures. The IPO consists of a fresh issue of 49.6 lakh shares, amounting to ₹64.97 crores. The price band was set between ₹124 to ₹131 per equity share, making it accessible for a wide range of investors. The minimum lot size for retail investors is 1,000 shares, requiring a minimum investment of ₹131,000.

As the company looks to expand its market presence, it aims to utilize the proceeds from the IPO for several objectives. ₹1648.85 lakhs will be allocated towards capital expenditures for setting up new exclusive brand outlets (EBOs), while ₹3500.00 lakhs will support working capital requirements. This strategic investment plan is expected to enhance the company’s operational capacity and market outreach.

The Grey Market Premium (GMP) for S D Retail Limited has been projected between ₹5 to ₹10, based on the company’s financial performance. Although the Grey Market Premium is not a definitive indicator of the stock's performance, it reflects the demand and supply dynamics surrounding the shares. It’s essential to note that trading based on Grey Market Premium can be speculative and should be approached cautiously.

For those tracking the live subscription status, as of 12:12 PM on September 23, 2024, the S D Retail IPO had been subscribed 3.79 times on its second day. This subscription rate is indicative of the high investor confidence in the company and its future prospects.

The company has also raised ₹18.49 crore from anchor investors at a price of ₹131 per share. This allocation of 14,12,000 equity shares to anchor investors signifies institutional backing, further bolstering the stock's initial performance.

Financially, SD Retail has shown strong growth over the past few years. For the fiscal years 2024, 2023, and 2022, the revenues from operations were ₹16,328.48 lakhs, ₹13,568.86 lakhs, and ₹12,873.65 lakhs, respectively. The EBITDA for the same periods were ₹1,334.80 lakhs, ₹760.85 lakhs, and ₹1,363.21 lakhs. The profit after tax has also seen a consistent rise, reaching ₹759.76 lakhs for fiscal 2024.

Regarding valuation metrics, the pre-issue EPS stands at ₹5.52, while the post-issue EPS is ₹4.05. The pre-issue P/E ratio is 23.73x, and the post-issue P/E ratio is 32.34x, indicating that the IPO is fairly priced compared to industry benchmarks. The company’s Return on Capital Employed (ROCE) for FY24 is 15.61%, while the Return on Equity (ROE) is 6.29%.

Given the robust financial performance and promising growth strategy, the Grey Market Premium (GMP) of S D Retail indicates potential listing gains of 5% to 10%. However, considering the overall market conditions and the stock's valuation, investors are advised to approach the S D Retail IPO with caution, particularly regarding long-term investment opportunities.

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