Studds Accessories Ltd. Eyes IPO as It Strengthens Market Position

Studds Accessories Ltd., a leading name in the two-wheeler helmet industry, is making a significant move by filing for an initial public offering (IPO) after a seven-year hiatus. The company, renowned for its high-quality helmets, is set to offer up to 77.9 lakh shares as part of a strategic stake sale, driven by its promoter group and other investors. This renewed effort comes after the company’s previous attempt in 2018, when it aimed to raise Rs 98 crore through a primary share issuance.

Current Market Standing and IPO Details

The upcoming IPO will focus entirely on a stake sale, meaning that the funds raised will not contribute to the company’s operational capital. Notable figures in this endeavor include Chairman Madhu Khurana, Managing Director Sidhartha Khurana, and the Leekha family. In its previous attempt, which didn’t materialize, shares of Studds were actively traded in the grey market, indicating a strong market interest.

• Company Valuation: As of August 2024, Studds is valued at over Rs 3,500 crore.
• Previous Offerings: In January 2024, the company issued 1.96 crore bonus shares in a 1:1 ratio.

Impressive Market Share and Sales Channels

Studds Accessories operates under the Studds and SMK brands, with a presence in 70 countries. According to the draft red herring prospectus for fiscal 2024, the company holds a 27.3% market share by volume and 25.5% by value in the domestic market. A substantial portion of its sales—over 15%—is derived from sales to original equipment manufacturers and government clients, including canteen store departments and naval canteens.

Financial Performance and Growth

The company has demonstrated robust financial growth, with fiscal 2024 figures highlighting a 6% increase in revenue to Rs 529 crore compared to Rs 499 crore in the previous year. Key financial metrics include:

• EBITDA: Up by 50% to Rs 90 crore from Rs 60 crore.
• Net Profit: Surged 73% to Rs 57 crore from Rs 33 crore.
• EBITDA Margin: Improved to 17% from 12%.

During the first half of fiscal 2024, Studds reported a topline of Rs 285 crore and a net profit of Rs 33 crore, with an operating profit of Rs 51 crore and a margin of 17.9%.

Financial Readiness

As of September 30, the company boasts a cash reserve of Rs 40 crore and total liabilities amounting to approximately Rs 125 crore. It’s noteworthy that Studds Accessories claims no comparable listed peers in India or globally, positioning it uniquely in the market.

Management Team and Advisory

The company has enlisted IIFL Capital Services Ltd. and ICICI Securities Ltd. as lead managers for this IPO, indicating a well-structured approach to its market debut.

With a solid foundation and a commitment to growth, Studds Accessories Ltd. is poised for a potential success story as it embarks on its journey to go public. Keep an eye on this company as it navigates the bustling market landscape!