What You Must Know About Forcas Studio IPO: Price ₹80 per share

About Forcas Studio

Forcas Studio is a men's clothing company established in 2010 that sells shirts, jeans, trousers, and other items online and in stores across India. It has a strong presence on major e-commerce platforms like Flipkart and Myntra and over 500 physical stores. Forcas offers quality, affordable menswear with a catalogue of over 1200 products. As of 2024, it has 4 warehouses and 68 employees to manage its growing operations. The company is now launching an IPO at ₹80 per share.

The Objective of the Issue

The following goals are the major uses of the issue proceeds for Forcas Studio IPO:

• Raise Capital for Growth: The primary goal of the IPO is to generate funds that Forcas Studio can use to expand its operations. This includes investing in new projects, upgrading technology, and hiring more talent to stay competitive.
• Enhance Market Presence: Going public will increase Forcas Studio's visibility and credibility in the industry. A successful IPO can position the company as a strong player, attracting more business opportunities and partnerships.
• Fund Research and Development: To continue innovating and delivering top-notch creative content, Forcas Studio plans to allocate part of the IPO proceeds to research and development. This will help create new, cutting-edge products and services.

Highlights of Forcas Studio Limited IPO

Forcas Studio Limited IPO is set to launch with a fixed price issue of ₹37.44 crores. The issue comprises a fresh issue of 46.8 lakh shares with no offer-for-sale component. Here are the key details of the IPO:

• The IPO opens for subscription on August 19, 2024, and closes on August 21, 2024.
• The allotment is expected to be finalised on Thursday, August 22, 2024.
• Refunds will be initiated on Friday, August 23, 2024.
• Credit shares to Demat accounts are also expected on Friday, August 23, 2024.
• The company will tentatively list on BSE SME on Monday, August 26, 2024.
• The price is fixed at ₹80 per share.
• The lowest lot size for the IPO application is 1600 shares.
• Retail investors need to invest minimum of ₹128,000.
• The minimum investment for High-Net-Worth Individuals (HNIs) is 2 lots (3,200 shares), amounting to ₹256,000.
• Horizon Management Private Limited is the book-running lead manager for the IPO.
•  Mas Services Limited serves as the registrar.
• Giriraj Stock Broking is the market maker for the issue.

Forcas Studio Limited IPO - Key Dates

The overall timeline for the Forcas Studio Limited IPO is as follows:

Forcas Studio Limited Issue Details/Capital History

Forcas Studio Limited aims to raise funds by issuing new shares via an IPO. They plan to offer 4,680,000 shares at ₹80 per share through a fixed-price model. Investors can bid for a minimum lot of around 1600 shares. Forcas Studio Limited currently has 46.8 lakh shares, which will go up to ₹37.44 crore post-IPO. The shares will be directly listed on the NSE SME Exchange. People can apply from August 19 to August 21.

Forcas Studio Limited Allocation & Minimum Investment Lot Size

The IPO shares of the company are distributed as follows:

Investors can place bids in multiples of 1,600 shares. The table below shows the minimum and maximum number of shares and the amounts invested by both retail investors and high-net-worth individuals (HNIs).

SWOT Analysis: Forcas Studio Limited

Strengths

• Diverse Product Range: Forcas Studio offers a wide variety of men's clothing, from casual wear like t-shirts and jeans to more formal attire such as shirts and trousers.
• Strong Market Presence: The company has a robust presence on major online platforms such as Flipkart, Myntra, Amazon, and more, as well as in over 500 large-format retail stores across India.
• Established Distribution Network: With four warehouses in Kolkata, Forcas Studio has developed an efficient supply chain that ensures timely delivery across more than 15,000 pin codes in India.
• White-Labeling Services: The company’s white-labeling services for well-known brands like Landmark Group, V-Mart Retail, and Highlander highlight its expertise in the industry and create additional revenue streams beyond direct sales.

Weaknesses

• High Dependence on E-commerce Platforms: While Forcas Studio has a strong online presence, this heavy reliance on third-party e-commerce platforms can be a double-edged sword.
• Limited International Reach: Although the company has a strong domestic presence, it focuses primarily on the Indian market.
• Workforce Size: With only 68 employees handling various critical functions, the company may need help scaling operations, especially if demand significantly increases.
• Brand Recognition: Despite its broad product range and market presence, the company’s brands might still be less recognised than more established fashion brands.

Opportunities

• Expansion into International Markets: Forcas Studio has significant potential to expand its operations beyond India. Tapping into international markets, especially in regions with growing demand for affordable fashion, could unlock new revenue streams.
• Growth in Online Retail: The continued growth of e-commerce in India presents a golden opportunity for Forcas Studio to enhance its online presence further.
• Product Line Expansion: By diversifying its product offerings to include accessories or expanding into women’s or children’s clothing, Forcas Studio could attract a broader customer base and increase its market share.
• Sustainability Initiatives: With increasing consumer awareness of sustainability, Forcas Studio could introduce eco-friendly clothing lines or adopt sustainable production practices.

Threats

• Intense Competition: The fashion industry, especially in the men’s clothing segment, is highly competitive, with many players offering similar products. Forcas Studio risks losing market share to established brands and new entrants.
• Fluctuating Consumer Preferences: Fashion trends can change rapidly, and consumer preferences are unpredictable. Keeping up with these trends requires constant innovation, which can be costly and resource-intensive.
• Economic Instability: Economic downturns or inflation could reduce consumer spending on non-essential items like fashion, directly impacting sales.
• Supply Chain Disruptions: Given the company’s reliance on its warehouses and supply chain operations, any disruptions—such as those caused by natural disasters, strikes, or global supply chain issues—could significantly affect product availability and delivery times.

Financial Highlights: Forcas Studio Limited

Forcas Studio Limited has shown a strong financial performance over the past three fiscal years. The company’s revenue has consistently increased, growing from ₹5,380.44 lakhs in FY22 to ₹9,648.78 lakhs as of February 29, 2024, reflecting robust sales growth. Similarly, the Profit After Tax (PAT) has risen significantly, from ₹78.44 lakhs in FY22 to ₹553.31 lakhs in FY24, demonstrating improved profitability.

Total assets have expanded substantially, rising from ₹4,333.27 lakhs in FY22 to ₹12,379.43 lakhs in FY24, indicating significant investment in infrastructure and inventory. The company's net worth has also seen a considerable increase, from ₹830.84 lakhs in FY22 to ₹1,901.97 lakhs in FY24, highlighting a strengthening financial foundation.

Reserves and surplus stood at ₹611.97 lakhs in FY24, further bolstering the company’s financial position. However, total borrowings have also increased, from ₹2,419.99 lakhs in FY22 to ₹2,861.04 lakhs in FY24, suggesting that the company has taken on additional debt to support its growth.

Overall, Forcas Studio Limited has demonstrated strong growth in revenue, profitability, and assets, supported by a healthy net worth, though with an increase in borrowings to fuel its expansion.