The much-awaited debut of Credo Brands Marketing (Mufti Menswear) will take place on December 27. Experts see the strong double-digit listing gains, citing the healthy financial performance in the past years, strong brand image, robust subscription numbers, reasonable valuations and positive market conditions.
The Rs 550-crore public issue has seen healthy demand from investors, subscribing 51.85 times during December 19-21. Qualified institutional buyers (QIBs) seem to be very bullish compared to other investors, buying 104.95 times the portion set aside for them, while the allotted quota for high networth individuals (HNIs) was subscribed 55.52 times and that of retail investors 19.94 times.
Mufti IPO shares also attracted strong interest in the grey market, trading at around 35-40 percent over the issue price of Rs 280 per share, analysts on anonymity said. The grey market is an unofficial platform wherein IPO shares can be bought and sold till the listing.
Dhruv Mudaraddi, research analyst at StoxBox expects the stock to list at a premium of around 45 percent to the issue price of Rs 280 per share.
Also read: RBZ Jewellers likely to stage a lacklustre debut on bourses
He believes that the strong listing can be attributed to Credo’s distinctive blend of strengths. "The company's qualitative advantages include a strong brand equity spanning a diverse product range, safeguarding against business model risks. Operating on a scalable and asset-light model, MUFTI demonstrates flexibility for expansion with minimal capital investments," Mudaraddi said.
Additionally, the brand's unwavering presence as a trendsetter in men's fashion and strong in-house design competencies establish formidable entry barriers as the company outsources all its products after their designing and does not manufacture any product.
Also read: Buy, sell or hold: What should you do with Muthoot, Suraj Estate and Motisons post-listing?
Financially, Mufti has reported an impressive CAGR of around 42 percent for revenue between FY21 and FY23, with net profit doubling over the previous year and showing a multi-fold increase compared to FY21. EBITDA increased at a CAGR of 84 percent during the same period with strong margin performance.
Saral Seth, vice president - institutional equities, and Jainam Shah, research associate at Indsec Securities feels Credo could be listed at Rs 350, which is 25 percent higher than the issue price.
At the upper price band of Rs 280 per share, the company is valuing at a P/E of 23.22x, with a market cap of Rs 1,800.4 crore post-issue of equity shares and a return on net worth of 29.98 percent.
Also read: Happy Forgings set for stellar debut on the bourses tomorrow
Indsec believes the valuation is at a 35 percent discount to its peers. "The strong earnings growth makes the apparel maker an attractive investment thesis."
Credo Brands Marketing, which offers a range of products from shirts to t-shirts to jeans to chinos, catering to year-round clothing needs, has 1,807 touchpoints with a presence in 591 cities.
The Mufti Menswear IPO was comprised only of an offer-for-sale issue, and there was no fresh issue component. Hence, the entire net issue proceeds were received by the selling shareholders.
The price band for the offer was Rs 266-280 per share.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Check Free Credit Score on Moneycontrol: Easily track your loans, get insights, and enjoy a ₹100 cashback on your first check!
