Stanley Lifestyles, promoted by
Sunil Suresh and Subha Sunil, is a super-premium and luxury furniture brand in
India offering complete home solutions, including installations. The company designs, manufactures and retails
its furniture products under the “Stanley” brand. Its product portfolio includes sofas,
cabinetry and furniture for living rooms, dining rooms, family rooms, kitchens,
bedrooms (including bedding products), and home offices.
Under Stanley brand it offers 3 different
store formats i.e. Stanley Level Next, Stanley Boutique and Sofas & More by
Stanley each catering to different price segments. While Stanley Level Next targets Ultra-Luxury
(Rs 0.50 million and above) segment the Stanley Boutique and Sofas & More
focuses on Luxury (Rs 0.30-0.50
million) and Super Premium (Rs 0.15-0.30 million) segments respectively.
The company retails its products
through its own network of COCO (company owned and company operated) and FOFO
(franchisee-owned and franchisee-operated) store with pan-India presence. As
end of Dec 31, 2023, it operates 38 COCO stores (all located in the major
metro-cities of Bengaluru, Chennai, New Delhi, Mumbai and Hyderabad) and 24
FOFO stores (in 21 cities across 11 States and Union Territories in India). The 38 COCO stores comprise 6 Stanley Next
(in 4 cities), 10 Stanley Boutique (in 5 cities), 19 Sofas & More by
Stanley (in 3 cities) and 3 0thers (D Eight and Stanley Personal stores) (in 2
cities). The 24 FOFO stores comprise 1 Stanley Next (in 1 cities), 4 Stanley
Boutique (in 3 cities), 19 Sofas & More by Stanley (in 19 cities).
Apart from providing home solutions
through its retail network, leveraging its ‘Stalnley’ brand, the company also
supplies leather automotive interiors to auto OEMs. It also does B2B sales of
premium and high-end luxury furniture products to airports, corporate offices
and high-end hospitals etc., apart from doing contract manufacturing.
In FY23 and 9mFY24 COCO stores
accounted for 63.08%/62.16% of revenue; FOFO stores 11.15%/13.04% and other
(contract manufacturing, leather automotive interiors, other B2B sales, trading
of raw materials) 25.77%/24.80% respectively. In FY23 & 9mFY24 the contribution from
Leather Automotive Interiors was 12%/11.27% and that from contract
manufacturing was 11.10%/11.16% respectively. Of FY23 and 9mFY24 revenue about
57.35%/56.22% come from Sofas & recliners with balance 42.65%/43.78% come
from others.
The company is among the few
home-grown super-premium and luxury consumer brands in India operating at scale
in terms of manufacturing as well as retail operations. Over the years, it has
developed a vertically integrated model that gives it control over its
processes, right from procurement of raw materials, design, production,
marketing and retail. Further, it is one of the few organized vertically
integrated furniture manufacturers with infrastructure capable of manufacturing
and producing furniture for every room.
Luxury/super premium furniture
manufacturing relies heavily on craftsmanship and is labour intensive in terms
of designs and leather sewing etc. The total number of craftsman associated with
the new product development division of the company as of December 31, 2023
stand at 58 (including permanent employees and craftsmen on contractual basis).
Thus, availability of adequate craftsman also creates significant barriers to
entry for any new entrant.
Currently it operates two
manufacturing facilities located at Electronic City, Bengaluru, Karnataka and
Bommasandra Jigani Link Road, Bengaluru, Karnataka. Of its two manufacturing
facilities, the facility at Electronic City is dedicated to producing bespoke
products all under the “Stanley” brand while the facility located at
Bommasandra Jigani Link Road specializes in contract manufacturing for various
multinational home furnishing players and manufactures products for its “Sofas
& More by Stanley” brand. State-of-the-art manufacturing capabilities and
know-how ensure the reliability, craftsmanship, design and customization of its
products, providing luxury home furniture with better aesthetics to customers.
In certain cities, to put real
estate into efficient use, it has adopted hybrid concept where all store
formats of the company are under one roof. Leveraging its experience to operate
different store formats, i.e., “Stanley Level Next” and “Stanley Boutique” at a
single location at one of its existing stores located at Hosur Road, Bengaluru,
Karnataka, the company intends to establish three Anchor Stores between Fiscals
2026 to 2027, each with an estimated average size of 30,000 square feet in the
States and Union Territories of Delhi, Telangana, Maharashtra through three of
its Subsidiaries. The Anchor Store format is a combination of
“Stanley Level Next”, “Stanley Boutique” and “Sofas & More by Stanley”
formats where luxury products are offered at a more affordable price.
All of its COCO stores are
operated by its Subsidiaries. The
company holds only 67% stake in ABS Seating and 55.95% in Shrasta Décor, with
balance held by 3rd party partners.
The issue
The initial public offer
comprises Fresh Issue (equity share aggregating upto Rs 200 crore) and the
Offer for Sale of 9133454 Equity Shares.
The offer for sale is made by Sunil Suresh (1182000 equity shares) and
Shubha Sunil (1182000 equity shares) both Promoter Selling Shareholders, Oman
India Joint Investment Fund II (5544454 equity shares), the Investor Selling
Shareholders, Kiran Bhanu Vuppalapati (1000000 equity shares) and Sridevi
Venkata Vuppalapati (225000 equity shares), the individual selling
shareholders.
Sunil Suresh, Shubha Sunil, Oman
India Joint Investment Fund II, Kiran Bhanu Vupplapati, Sridevi Venkata
Vuppalapati will hold 28.4%, 28.4%, 14.59%, 1.66% and
0.16% stake respectively on post issue expanded equity.
Objects of the issue
The net proceeds are proposed to
be utilized towards 1) investment in certain subsidiaries, for opening of new
stores, amounting Rs 90.13 crore, for opening of Anchor Stores amounting Rs
39.99 crore and for renovation of the existing stores amounting Rs 10.04 crore;
2) funding capital expenditure requirements of the company and its material subsidiary
Stanley OEM Sofas; 3) general corporate purposes.
Over the next 3 years the company
plans to open 24 new stores (2 under Stanley Level Next, 9 under Stanley
Boutique, 13 under Sofas & More by Stanley brands) across Delhi (6 stores),
Tamil Nadu(5 stores), Telangana(7 stores), Maharashtra(3 stores), and
Karnataka(3 stores).
Strength
Largest and the fastest growing
brand in the luxury/super-premium furniture segment
Pan-India retail presence with
strategically located stores providing comprehensive home furniture with offerings across categories and price
points
Focus on design-led product
innovation and strong skilled craftsmanship capabilities of employees enable it
to offer bespoke high quality products to customers
Vertically integrated operational
model with in-house manufacturing along with retail presence
Strong growth of organized
furniture and home goods market in India that is expected to reach a market
share of 35% by 2027 with an annual growth rate of 36%.
Weakness
Does not own the brand name
“Stanley” which is registered in the name of one of its Promoters, Sunil
Suresh. Though the company has entered into Assignment Deeds with Sunil Suresh,
the trademarks are yet to be registered in the name of the company. Further, Sunil Suresh, the promoter has
entered into a co-existence agreement with Stanley Furniture Company, Inc to
limit and restrict the use of the term “Stanley” as a trademark in a composite
manner in respect of products.
Variations in demand and changes
in consumer preference away from sofa and recliner products could have an
adverse effect on the business, results of operations and financial condition.
Generated a substantial portion
of its sales from its stores located in southern regions of India and more
specifically Karnataka (62.12%/60.81% in FY23 & 9MFY24) & Telangana
(12.41%/11.28% in FY23 & 9MFY24) and thus adverse developments affecting
its operations in that region/market could have an adverse impact on its
performance.
Top 5 customers account for the
entire the aggregate revenue of Leather Automotive Interiors & Contract
Manufacturing business in FY23 & 9mFY24, and thus any loss of customers
will impact the business operations of the company.
The luxury and super-premium
furniture market in India is highly competitive and segmented with presence of
both unbranded and branded overseas and domestic players.
Steady fall in OPM that was 20.2%
in FY22 declined to 19.7% in FY23 and further to 18.4% in 9mFY24.
Valuation
Consolidated (re-stated) sales
for FY2023 were up 43% to Rs 419 crore. With a 50-bp contraction in the OPM, OP
was up 40% to Rs 82.72 crore. After
accounting for higher other income, higher interest and depreciation, the PBT
was up 45% to Rs 46.40 crore. Pat after MI was up 54% to Rs 32.88 crore.
Consolidated sales in the nine months
ended December 2023 were Rs 313.31 crore. OP was Rs 57.77 crore, with the OPM
stood at 18.4%. Pat was Rs 19.78 crore.
On post-issue expanded equity (at
the upper price band), the EPS for FY2023 and annualized 9mFY2024 were 5.8 and 4.6,
respectively. The asking price, at the upper price band, discounts the
annualized 9mFY24 EPS by 80.2 times. The price/BV stood at 4.8 times.
There are no direct listed
companies in India or internationally with whom its business model can be
compared that matches the size and scale of its business operations. However,
Ethos, a luxury watch retailer quotes at a PE of 78 times of its FY24
consolidated EPS and P/BV of 7.2 times. The Metro Brands, a footwear retailer
quotes at a PE of 81.4 times and P/BV of 18 times.
Stanley Lifestyles : Issue
Highlights
|
|
Fresh Issue (Rs crore)
|
200
|
Offer for sale (in equity share
nos.)
|
9133454
|
Price band (Rs.)
|
|
Upper
|
369
|
Lower
|
351
|
Post-issue equity (Rs crore)
|
|
in Upper price band
|
11.40
|
in Lower Price Band
|
11.46
|
Post-issue promoter (including
promoter group) stake (%)
|
56.81
|
Minimum Bid (in nos.)
|
40
|
Issue Open Date
|
21-06-2024
|
Issue Close Date
|
25-06-2024
|
Listing
|
BSE, NSE
|
Rating
|
44 /100
|
Stanley Lifestyles : Re-stated Consolidated Financials
|
|
|
|
|
|
|
2103 (12)
|
2203 (12)
|
2303 (12)
|
2312 (9)
|
|
Sales
|
195.78
|
292.20
|
419.00
|
313.31
|
|
OPM (%)
|
15.2
|
20.2
|
19.7
|
18.4
|
|
OP
|
29.78
|
59.01
|
82.72
|
57.77
|
|
Other income
|
5.93
|
5.55
|
6.62
|
8.98
|
|
PBIDT
|
35.71
|
64.56
|
89.34
|
66.75
|
|
Interest
|
8.77
|
10.88
|
14.69
|
14.27
|
|
PBDT
|
26.93
|
53.68
|
74.65
|
52.48
|
|
Depreciation
|
20.71
|
21.75
|
28.25
|
27.75
|
|
PBT
|
6.22
|
31.94
|
46.40
|
24.73
|
|
EO Exp
|
0.00
|
0.00
|
0.00
|
0.00
|
|
PBT after EO
|
6.22
|
31.94
|
46.40
|
24.73
|
|
Tax
|
4.30
|
8.72
|
11.42
|
6.03
|
|
PAT from Continuing Biz
|
1.92
|
23.22
|
34.98
|
18.70
|
|
Share of Profit from Associates
|
0.00
|
0.00
|
0.00
|
0.00
|
|
PAT from Continuing Biz
|
1.92
|
23.22
|
34.98
|
18.70
|
|
Minority Interest
|
0.89
|
1.87
|
2.10
|
-1.08
|
|
Net profit
|
1.03
|
21.35
|
32.88
|
19.78
|
|
EPS (Rs)*
|
0.2
|
3.7
|
5.8
|
4.6
|
|
* on post IPO fully dilluted
equity (on upper price band) of Rs 11.40 crore. Face Value: Rs 2
|
|
EPS is calculated after excluding
EO and relevant tax
|
|
|
|
|
|
|
Figures in Rs crore
|
|
|
|
|
|
|
Source: Capitaline Corporate
database
|
|
|
|
|
|
|
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