Ahmedabad-based sleepwear-specialist S D Retail Limited has filed draft red herring prospectus (DRHP) for launching its initial public offering (IPO) on NSE Emerge platform. The company is engaged in the business of designing, manufacturing, outsourcing, marketing, and retailing sleepwear under the brand name “SWEET DREAMS”. SD Retail IPO will see a share sale of 49.60 lakh shares, amounting to at least INR 51 crore, the draft papers revealed. There is no Offer For Sale (OFS) component in the upcoming IPO.
SD Retail IPO Proceeds: New EBOs, Working Capital
Funds raised from the public offer are proposed to be used towards capital expenditure in the form of setting up new exclusive brand outlets (EBOs) amounting to INR 16.49 crore. The company gets 6.25% of its revenues through EBOs, per the latest regulatory information. However, the outlets also serve the purpose of enhancing the brand’s perception among buyers.
Additionally, INR 35 crore have been earmarked for funding working capital requirements.
SD Retail IPO: Business Overview
Incorporated in 2004, the company offers a diverse range of stylish and comfortable sleepwear for the entire family. SWEET DREAMS has carved out a unique position in a habitual apparel category, with customers wearing its clothes daily.
The brand primarily targets the modern Indian woman’s sleepwear needs, as this demographic is highly engaged with the category across various retail channels. Additionally, S D Retail Limited provides sleepwear for men and children, whose casual attire is often purchased by women in the household.
The company boasts one of the broadest selections of sleepwear among Indian apparel retailers, offering a variety of fabrics, colors, and styles, including pyjamas, night sets, nighties, and T-shirts.
S D Retail Limited designs its products to cater to men and women of all age groups, including children aged 2 to 16 years, and ensures fits suitable for various body types and physiques. The company also extends its offerings to adjacent categories such as loungewear, workout wear, athleisure, and work leisure pants.
SD Retail’s Distribution Strategy: Traditional + Modern
The company employs omnichannel distribution and retail strategy that has a mix of traditional distributors, EBOs, multi-brand outlets (MBOs), and online channels. MBOs is the single largest channel accounting for over 63% of its revenues. Online channels including various e-commerce platforms amount to 17% of its revenues in the latest period.
By establishing a pan-India presence through various touchpoints, including EBOs, large format stores (LFS), and MBOs, S D Retail Limited has effectively reached a broad customer base. The company’s asset-light model, which involves no ownership of the properties where its stores are located, allows for scalability and efficient opening of new EBOs.
Financial Performance
SD Retail registered a profit of INR 4.3 crore in the financial year FY 2023 on revenue from operations of INR 135.09 crore.
For the eleven months ended February 29, 2024, revenue from operations stood at INR 144.14 crore, while profit after tax jumped to INR 6.15 crore.
SD Retail is largely owned by promoters and promoter group entities. Chanakya Corporate Services Pvt Ltd and Chanakya Value Creation LLP collectively own 11.1% equity stake in the company.
Beeline Capital Advisors Private Limited is the Book Running Lead Manager, and KFin Technologies Limited is the registrar of the issue.
