Introduction:
2023 was a highly successful year for Indian stock market investors. As they prepare to welcome 2024, there is an opportunity for them to conclude this year on a positive note. Several promising companies are eager to capitalise on the ongoing bullish market trends by initiating their Initial Public Offerings (IPOs). One such company that has garnered significant excitement is Credo Brands Marketing Limited.
Credo Brands Marketing Limited is the parent company of the renowned men’s clothing brand “Mufti”. It plans to raise approximately Rs. 550 crores through an IPO, which will be a complete offer for sale. From the money raised, the company plans to fulfil its working capital requirements and achieve the benefits of getting listed on the stock exchanges.
Credo Brands Marketing IPO opens for public subscription on Tuesday, 19 December 2023 and closes on Thursday, 21 December 2023. As per the T+3 norm, the company’s shares will make their debut on the stock exchanges on 27 December 2023. Keep reading to learn more details about the IPO, including the issuing company’s financials, strengths, weaknesses, grey market premium (GMP), and more.
About Credo Brands Marketing Limited
Established in 1999, Credo Brands Marketing Ltd specialises in men's casual clothing and is best known for its leading brand "Mufti”. The company offers an extensive array of products suitable for various occasions. Its product range spans from shirts and t-shirts to jeans, chinos, and jackets, providing a comprehensive selection of year-round clothing with a significant emphasis on casual wear.
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Credo Brands Marketing Limited primarily caters to customers seeking casual clothing in the mid-premium and premium price range. As of 30 September 2023, the company had established connections with 48 suppliers of fabrics and accessories and an equal number of manufacturing partners. Its distribution network comprises 379 exclusive brand outlets, 1,305 multi-brand outlets, and 89 departmental stores.
Key Strengths of the Company
Below are the key strengths of Credo Brands Marketing Ltd, as specified in the company’s Red Herring Prospectus (RHP):
- “Mufti” enjoys a strong brand recall with a pan-India presence
- The company boasts a multi-channel and pan-India distribution network comprising 379 EBOs, 1305 MBOs, and 89 departmental stores
- The company maintains long-standing relationships with its manufacturers and raw material suppliers
- The company boasts an internal and skilled team dedicated to textile printing and pattern design
- The revenues have increased steadily during the last three financial years
Key Risks or Weaknesses Highlighted
The primary risks or weaknesses associated with Credo Brands Marketing Ltd. Include:
- The company typically concentrates on the sale of men’s casual western wear clothing. Unfavourable market circumstances can harm the business
- The company generates more than 90% of its revenues from offline sales. It needs to expand its footprint in the online marketplaces
- It operates in a highly unorganised and competitive industry
- The company’s warehouses and manufacturing partners are concentrated in specific geographical regions, which makes it prone to supply chain challenges
- The company is dependent on third-party logistics partners for the delivery of products. Any negligence on their part can harm the company’s reputation
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Core Financials of the Company
The company’s net worth and revenue from operations have increased at a steady rate in the last three financial years. However, what stands out is that the net profits have increased multiple times from Rs. 3 crores in FY21 to Rs. 78 crores in FY23. The table below illustrates the crucial financials of Credo Brands Marketing Ltd. for the last three years:
*Amount in Crores
Source – RHP dates 12 December on the SEBI website
Details of the IPO
The table below illustrates crucial details of the Credo Brands Marketing IPO:
The final verdict
The financials of Credo Brands Marketing Ltd. are robust. Additionally, the shares were trading for a premium of Rs. 125 in the grey market as of 18 December 2023, which indicates healthy listing gains. But before investing, you must carefully analyse several factors, such as your risk appetite, investment goal, and the prevailing market conditions.
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