Mufti Menswear brand owner Credo Brands Marketing was subscribed 2.12 times at the end of Day 1. The public issue was subscribed 3.34 times in the retail category. The QIB segment got 0.01 times subscribed while NII category was subscribed 2.07 times by 6 pm on Day 1.
Issue size
The issue is on till December 21 and 19,634,960 shares are on offer. The price band is between Rs 266- 280 per share. The issue offers 6,872,236 shares to retail investors, 3,926,992 shares to qualified institutional buyers and 2,945,244 shares to non-institutional investors. This offer only comprises of offer-for-sale (OFS) by promoters and investors.
The Grey market premium of the issue at the end of day 1 is hovering close to Rs 145 a share and indicates a profitable listing. Typically, the grey market premium (GMP) is the price at which the issue trades before listing on the unregulated or the grey market. Though not an official number, the GMP is often an indicator of how the issue might fare on listing day. A positive GMP means that investors could expect profit while a negative GMP means vice-versa, that investors may see some losses.
A look at the dynamics of the men’s apparel market indicates that it is likely to post strong growth and the estimates range around 18% CAGR by FY27. This kind of projection no doubt sets the stage for a favourable playing ground for Credo. A strong brand equity, diverse product range and scalable asset-light business model are some of the positives for Mufti-parent Credo Brands Marketing.
Credo Brands Marketing: Subscribe or not?
The question therefore is should you subscribe to the issue? Stoxbox, part of the research team of BP Equities, indicate that one can subscribe to this issue given the valuation dynamics. According to them, “the IPO offers a competitive P/E ratio of 23.2x times based on FY23 EPS, reflecting reasonable pricing, especially considering the impressive earnings growth rate and an industry average P/E of 95.2x. We, therefore, recommend investors to “SUBSCRIBE” for listing gains to the issue.”
Key risks
However, the analysts also highlighted the risks involved. According to them, “the company
-Operates in a highly competitive market with many international brands
-The brand is specifically focused on men’s casual wear, abrupt change in men’s consumer preference can significantly impact the brand
-Just like any other organised retail business, the company is at risk of having unsold inventory.”
