Baazar Style Retail up 5% in trade; JM Financial initiates 'Buy'; check TP

Baazar Style Retail shares advanced 5 per cent in trade on BSE, logging an intraday high at Rs 242.1 per share. Around 10:33 AM, Baazar Style Retail share price was up 1.58 per cent at Rs 234.15  per share on BSE.

 

 In comparison, the BSE Sensex was up 1.18 per cent at 75,045.56. The market capitalisation of the company stood at Rs 1,747.17 crore. The 52-week high of the stock was at Rs 430.95 per share and the 52-week low was at Rs 181.3 per share.

 

Domestic brokerage JM Financial has initiated coverage on Baazar Style Retail with a 'Buy' call. The brokerage has kept the target price at Rs 400 per share.   ALSO READ: Stock Market LIVE: Sensex climbs 800 pts to 74,970; Nifty at 22,740; Financials, Auto, Metal lead

 

The brokerage is upbeat about the company's strong growth potential in a huge, largely unorganised Total Addressable Market (TAM). 

 

The value apparel market was worth Rs 3.7 trillion in FY24. Of this, the organised market was Rs 1.3 trillion and it is expected to grow at 17 per cent compound annual growth rate (CAGR) over FY24-27 (19 per cent over FY19-24) to Rs 2.1 trillion in FY27. The growth will be led by better quality products at affordable prices and shift from unbranded products to branded products and so on. 

 

Strong presence, huge TAM and high growth market places will work in the favour of Style Baazar as per JM Financial.   ALSO READ: SpiceJet shares extend rally, up 10% in 2 days; here's what's driving stock

 

Additionally, the brokerage believes the company has high potential for store expansion on the back of strong unit economics. As per calculation, the company has the potential to add at least 265 stores considering the current economic and gross domestic product (GDP)/capita situation, which can only improve in future with increasing per capita income and development of cities. 

 

"We expect the company to add 145 stores over FY25-27E," the report read. 

 

On the other hand, the brokerage sees high revenue concentration (80-90 per cent) from its core markets, heavy reliance on apparel sales, increased competition in value fashion retail, and unsuccessful launch of private labels, which may impact the business adversely, and dependency on a few suppliers for procurement needs without any definitive agreements as key risks for the company.   ALSO READ: Coffee Day Enterprises hits 5% upper circuit on settling outstanding debt

 

Baazar Style Retail is one of the fastest growing value fashion retailer in Eastern India with a market share. In addition to affordable products under the apparels section, BSRL also offers non-apparels and home furnishing products.