Studds IPO: Helmet-Maker Retries Market Debut After Seven Years

Helmets manufacturer Studds Accessories Ltd. has filed draft papers for an initial public offering, seven years after it had its first go at a market debut. The offer will be a pure stake sale, with the promoter group and other stakeholders looking to offer up to 77.9 lakh shares.

Studds, the largest two-wheeler helmet player by volume, had sought to raise Rs 98 crore through a primary issuance of shares in 2018. There was also an offer for sale component of up to 39.4 lakh shares. While the plan was not followed through, shares of Studds soon became available for trade in the grey market.

This time around, the offer for sale will see participation from largely the same set of people as last time — Chairman Madhu Khurana, Managing Director Sidhartha Khurana, and members of the Leekha family.

Since this a pure offer for sale, no funds from the IPO will go to the company.

The Faridabad-based company is valued at over Rs 3,500 crore as per last transaction of shares in August 2024. In January this year, the company also allotted 1.96 crore bonus shares in a 1:1 ratio.

The firm sells accessories under the Studds and SMK brands across 70 countries. As of fiscal 2024, Studds Accessories has a domestic market share of 27.3% by volume and 25.5% by value, according to the draft red herring prospectus.

Original equipment manufacturers and government customers accounted for over 15% of Studds' sales for the first six months of fiscal 2024. This includes sales to canteen store departments, Indian naval canteens and even central police canteens.

The company said it has no listed peers which are comparable in size in India or globally.

IIFL Capital Services Ltd. and ICICI Securities Ltd. are the lead managers for the deal.

• Revenue rose 6% to Rs 529 crore vs Rs 499 crore.

• Ebitda rose 50% to Rs 90 crore from Rs 60 crore.

• Ebitda margin rose to 17% from 12%.

• Net profit rose 73% to Rs 57 crore vs Rs 33 crore.

Studds has been consistently growing its topline over the last three fiscals and profit has grown at a compound annual growth rate of over 40% since 2022.

For the six months ended September 2024, the company reported a topline of Rs 285 crore, and a net profit of Rs 33 crore. The operating profit stood at Rs 51 crore, with its margin against the revenue coming up to 17.9%.

As of Sept. 30, the company sits on a cash pile of Rs 40 crore, and has total liabilities of about Rs 125 crore.