Credo Brands Marketing IPO: 10 must-know points from RHP
The initial public offering (IPO) of Credo Brands Marketing opened for subscription on Tuesday (December 19) and will remain open until Thursday (December 21). The company aims to raise ₹549.78 crore through a complete offer for sale.
On the first day, the IPO received a decent response from investors, with an overall subscription rate of 2.08 times. Retail investors showed strong demand, with a subscription rate of 3.28 times, while the NII portion saw a subscription of 2.06 times. The qualified institutional buyers (QIB) portion, however, had a modest 1% subscription.
Credo Brands Marketing Limited, known for its flagship brand Mufti, offers casual clothing for men. Over the years, the company has expanded its product mix, now including a wide range of products such as sweatshirts, jeans, jackets, and more.
The company’s products are available through a pan-India multichannel distribution network, which includes exclusive brand outlets, large format stores, multi-brand outlets, and online channels.
As India has a young population, the country’s retail consumption-related trends are growing at a faster rate than developed nations. The increasing interest in entertainment and lifestyle activities among the youth has led to a surge in discretionary spending and a demand for branded products.
Credo Brands Marketing reported a revenue of ₹498 crore for FY23, representing a 46% increase compared to the previous year. The company’s profit after tax for FY23 was ₹77.51 crore, showing a significant improvement of 116.87% over the previous year’s net profit.
However, the company faces some challenges, including its heavy reliance on offline retail channels for over 90% of its revenue. It needs to increase revenue from online sales to diversify its distribution channels.
Competition law in India could also impact the company’s business, and any adverse application or interpretation of the Competition Act may have negative consequences.
Brokerage firms have varying opinions on the IPO. Nirmal Bang recommends subscribing to the issue, highlighting the company’s healthy profits and reasonable valuation. Swastika Investmart suggests considering the IPO for listing gains as well as long-term investment. BP Equities believes the IPO offers a competitive P/E ratio based on FY23 earnings and recommends subscribing for listing gains.
The Technopak Report indicates that the share of the organized market for men’s apparel in India is expected to increase, with casual wear experiencing significant growth.
Overall, Credo Brands Marketing’s IPO presents an opportunity for investors to tap into the growing demand for branded casual wear in India.
