What You Need to Know from the RHP Before Investing in Stanley Lifestyles’ ₹200 Crore IPO

Stanley Lifestyles, a top-tier luxury furniture brand in India, is planning an initial public offering (IPO) to raise ₹200 crore. The funds from the IPO will be used to expand their working capital, repay debt, and for general corporate purposes. The company aims to open more stores and buy new equipment with the money raised.

Here are 10 key points from the Red Herring Prospectus (RHP) for investors:

1. Promoters and Shareholding

The promoters, Shubha Sunil and Sunil Suresh, own 67.28% of the company’s equity shares. In the IPO, they will sell up to 1,182,000 shares each. Other shareholders selling their stakes include Oman India Joint Investment Fund II (5,544,454 shares), Kiran Bhanu Vuppalapat (1,000,000 shares), and Sridevi Venkata Vuppalapati (225,000 shares).

2. IPO Allocation

The IPO will reserve 15% of shares for non-institutional investors, 50% for qualified institutional buyers, and 35% for retail investors.

3. Company Overview

Stanley Lifestyles designs, manufactures, and sells luxury furniture across India. They use both company-owned and franchise-owned stores. They are one of India’s top four fully integrated luxury furniture manufacturers.

4. Business Operations

Stanley Lifestyles stands out by controlling its entire production process. This includes sourcing raw materials, manufacturing, quality control, marketing, and selling through their own stores.

5. Retail Presence

As of December 31, 2023, the company operated 38 company-owned stores in major cities like Bengaluru, Chennai, New Delhi, Mumbai, and Hyderabad, and 24 franchise-owned stores in 21 cities across 11 States and Union Territories.

6. Subsidiaries

Stanley has several subsidiaries, including Stanley OEM Sofas Ltd., Stanley Retail Ltd., ABS Seating Private Ltd., and step-down subsidiaries like Sana Lifestyles Ltd., Scheek Home Interiors Ltd., Shrasta Decor Private Ltd., and Staras Seating Private Ltd.

7. Key Clients

A significant portion of Stanley’s revenue comes from their top five clients, especially from contract manufacturing and leather car interiors.

8. Manufacturing Capabilities

The company’s in-house production gives them control over the quality and supply of their products, which sets them apart from other furniture brands.

9. Financial Performance

In the fiscal year ending March 31, 2023, Stanley’s sales grew by 42.94%, and their profit after tax increased by 50.64%.

10. Risks

Key risks include the heavy reliance on the sales of sofas and recliners. Any change in demand or consumer preference for these items could impact their financial performance. Additionally, any disruption in the supply of raw materials like wood and leather could also affect their operations.

Lock-In Period

Shares allotted to anchor investors will have a lock-in period of 30 days for the remaining shares and 90 days for 50% of the shares.

Stanley Lifestyles is expanding its footprint in the luxury furniture market with a new IPO. The company plans to use the proceeds to open more stores, upgrade their manufacturing facilities, and pay off debts. Investors should consider the company’s solid financial performance, growth plans, and the associated risks before investing.