| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 351 to ₹ 369 | 40 | 21st June, 2024 – 25th June, 2024 | ₹ 537.02 Cr |
Company Overview
Founded in 2007, Stanley Lifestyles Limited is a leading designer and manufacturer of super-premium, luxury, and ultra-luxury furniture under the brand “Stanley”, building customer loyalty through quality products and targeted marketing campaigns like “Beautiful Living” and “Luxury Unlimited”. Their diverse product range includes Seating (sofas, recliners, dining chairs), Cased Goods (coffee tables, dining tables), Kitchens and Cabinets (wardrobes, bar cabinets), Mattresses and Beds, and Automotive and Other products like customizable shoes and leather seat covers. By the end of 2023, Stanley operated 38 company-owned stores and 24 franchisee-operated stores across major Indian cities. Their Bengaluru facility, spanning 15,000 square feet, houses the product development department with 778 employees. Recognized for quality and craftsmanship, Stanley engages in targeted marketing and introduced 88 new products in Fiscal 2023, reinforcing its position in the luxury furniture market.
Objects of the issue:
The company proposes to utilize the net proceeds towards the funding of the following objects:
- Opening new stores under format “Stanley Level Next,” “Stanley Boutique,” and “Sofas & More by Stanley”;
- Establishing anchor stores;
- Renovating existing stores: “Stanley Level Next,” “Stanley Boutique,” and “Sofas & More by Stanley”;
- Capital expenditures for machinery and equipment;
- General corporate purposes.
Investment Rationale:
Market leadership coupled with diverse product range offers headroom for growth
‘Stanley is a leading super-premium and luxury furniture brand in India, known for its extensive manufacturing and retail operations. With the largest number of stores and the fastest revenue growth in the industry, Stanley’s retail presence is three times that of its nearest competitor as of January 31, 2024 (RedSeer Report). Founded by first-generation entrepreneurs, Stanley transitioned from premium automotive seating to high-quality, personalized home furniture, offering bespoke products. Their range includes sofas, cabinetry, and furniture for every room, available in over 300 colors and 10 types of leathers and fabrics, allowing customers to achieve a coordinated home aesthetic. By leveraging the trend towards organized retail, Stanley has increased its market share and average billing size, particularly in key locations like Sadashivnagar in Bengaluru. Stanley’s diverse portfolio and commitment to quality position it for sustained growth and market leadership.
Extensive Pan-India presence and design-led innovation places it on the forefront of the luxury furniture sector
With strategically located stores across major metropolitan cities and numerous franchisee-operated outlets, Stanley Lifestyles ensures broad accessibility and strong market penetration throughout India. They retail their furniture products primarily through three store formats, each catering to a different segment of the market i.e. Stanley Level Next (ultra-luxury), Stanley Boutique (luxury), Sofas & More by Stanley (super premium). Stanley excels in design-led innovation, leveraging over 15 years of retail experience to understand and cater to diverse customer preferences nationwide. In Fiscal 2023 alone, they introduced 88 new products, complemented by 71 new products by December 31, 2023, under the “Stanley” brand. With a dedicated 15,000 square-feet product development division in Electronic City and a team including a master Italian designer and 48 employees, Stanley continuously updates its offerings, from modern recliner sofas to kitchen and storage solutions. They prioritize customer feedback, employ European expertise, and attend international furniture shows to ensure their products align with global trends while reflecting local tastes. This approach underscores Stanley’s commitment to maintaining market relevance and quality, driving their leadership in the luxury furniture sector.
Valuation
The real estate boom in India has propelled significant growth in the furniture market, driven by urbanization, rising incomes, and a shift towards tier-II cities. Home renovations and upgrades are fueling demand for furniture and home goods as consumers seek to enhance their living spaces. Despite setbacks during COVID-19, the tourism and hotel industries are rebounding, contributing to increased demand for aesthetic and comfortable furniture. The luxury and super-premium furniture segment, comprising 8% of the overall market, is expanding due to the rise in dual-income households and the preferences of urban millennials and Gen Z for quality and trendy décor. Stanley, as a market leader, stands to benefit from these trends, supported by impressive CAGR in revenue/EBITDA/PAT at 46%/66%/326%, respectively. Additionally, the company has shown improvement in EBITDA margin, increasing from 15.2% in FY21 to 19.7% in FY23. The company has demonstrated consistent enhancement in its Return on Capital Employed (ROCE), progressing from 5.5% in FY21 to 16.6% in FY23. Similarly, its Return on Equity (ROE) has shown steady improvement, rising from 1.0% in FY21 to 16.3% in FY23. The company commands a high valuation at a P/E of 57.9x based on FY2023 earnings. However, considering the industry dynamics and growth prospects, we recommend a SUBSCRIBE rating for the issue.
