Studds Accessories Limited, one of India’s leading manufacturers of two-wheeler helmets, is set to launch its much-anticipated Initial Public Offering (IPO). Known for its innovative and durable helmets, Studds has a strong foothold in the safety gear market, catering to both the mass market with its Studds brand and the premium segment through SMK Helmets. This blog provides a detailed overview of the company, its IPO, and the financials, helping investors make an informed decision.
Company Overview
Established in 1973, Studds Accessories Limited has built a reputation as a trusted name in two-wheeler safety. The company is recognized for its ability to produce high-quality, internationally certified helmets. Studds operates with a vision to provide safer and more reliable options for two-wheeler riders, a vision that has led to significant growth in both domestic and international markets.
- Market Leadership: Studds is the leader in the two-wheeler helmet market in India, holding a 25.66% market share.
- Global Reach: The company exports its products to over 50 countries, including regions like Europe, Latin America, and the Middle East.
- Manufacturing Capabilities: Studds operates four state-of-the-art manufacturing facilities and plans to ramp up production to meet growing demand. The company aims to scale its production to 13.5 million units annually.
About the IPO
Studds Accessories is preparing to launch its IPO, which is expected to generate significant interest from investors. The IPO will likely consist of both fresh issues and an Offer for Sale (OFS), allowing the company to raise capital while providing an opportunity for existing stakeholders to divest their holdings.
- Expected Share Price: The share price is expected to be between ₹1,400 and ₹2,000 per share, depending on market conditions and investor sentiment.
- Lot Size: Investors can apply for a minimum lot size of 25 shares.
- Market Capitalization: Based on the expected share price, Studds Accessories’ market capitalization is estimated to be around ₹2,696 Crore.
Key Financials
Studds Accessories has shown consistent growth in its financials, backed by robust market demand for its products. The company’s low debt-to-equity ratio, strong ROE, and healthy profit margins make it an attractive proposition for investors.
Here are the key financials:
| Particulars | Value |
| Per Equity Share | ₹685 |
| Market Cap (in ₹ Cr.) | ₹2,696 |
| P/E Ratio | 47.31 |
| P/B Ratio | 6.88 |
| Debt to Equity | 0 |
| ROE (%) | 14.74 |
| Book Value | ₹99.56 |
| Face Value | ₹5 |
| Total Shares | 39,353,400 |
| 52 Week High | ₹1,525 |
| 52 Week Low | ₹685 |
Balance Sheet
Studds Accessories has demonstrated consistent growth in its assets and liabilities over the years. Here is the breakdown of the company’s balance sheet for the past four years:
| Assets (in ₹ Cr.) | 2021 | 2022 | 2023 | 2024 |
| Fixed Assets | 261 | 305 | 307 | 324 |
| CWIP | 6 | 10 | 12 | 10 |
| Investments | 0 | 0 | 0 | 0 |
| Trade Receivables | 27 | 28 | 31 | 28 |
| Inventory | 29 | 42 | 35 | 40 |
| Other Assets | 111 | 70 | 76 | 83 |
| Total Assets | 434 | 455 | 461 | 485 |
| Liabilities (in ₹ Cr.) | 2021 | 2022 | 2023 | 2024 |
| Share Capital | 9.8 | 9.8 | 9.8 | 9.8 |
| FV (Face Value) | 5 | 5 | 5 | 5 |
| Reserves | 280 | 301 | 328 | 377 |
| Borrowings | 28 | 44 | 31 | 0.6 |
| Trade Payables | 63 | 50 | 35 | 31 |
| Other Liabilities | 54 | 51 | 57.2 | 66.6 |
| Total Liabilities | 434.8 | 455.8 | 461 | 485 |
Why Invest in Studds Accessories IPO?
- Market Leadership: Studds is the largest two-wheeler helmet manufacturer in India, which has led to a loyal customer base and high brand recall. The company also benefits from its established presence in international markets.
- Regulatory Push for Helmets: The Indian government’s increasing focus on road safety laws and regulations has made helmets mandatory for all riders. This regulatory push is driving up demand for high-quality helmets, benefiting companies like Studds.
- Strong Financial Performance: Studds’ revenue projections for FY24 exceed ₹500 crore, showcasing robust growth. The company’s low debt-to-equity ratio (0.14) reflects its strong financial management and stability.
- Global Expansion Potential: Studds is actively expanding its footprint in international markets, particularly in Europe, Latin America, and the Middle East. This diversification ensures the company’s growth and revenue scaling beyond India.
- Diversified Product Portfolio: Studds has a wide range of helmets under both its Studds and SMK brands, which cater to different market segments. Additionally, the company is expanding its offerings to include bicycle helmets, aligning with the rising global trend for eco-friendly transportation.
Risks to Consider
- Dependence on Two-Wheeler Market: While the two-wheeler market is currently strong, any downturn in the automotive sector or significant changes in consumer behavior could impact demand for helmets.
- Raw Material Price Volatility: Fluctuations in the prices of raw materials such as plastics and metals can affect profit margins, as the production of helmets relies heavily on these materials.
- Competitive Pressure: While Studds is a market leader, it faces competition from emerging regional brands and international players. The market’s competitiveness could pose challenges to Studds’ growth and profitability.
Ownership Breakdown and Management
Studds Accessories is primarily owned by a few key promoters, who have decades of experience in the industry:
- Madhu Bhushan Khurana (Chairman & MD): With over 40 years of experience in the industry, he is the major driving force behind the company’s success.
- Sidhartha Bhushan Khurana (MD): He has 30+ years of experience and plays a key role in the company’s growth.
- Manish Mehta (CFO): With over 30 years of experience in financial management, he ensures the company’s financial health and stability.
Conclusion
The Studds Accessories IPO offers a promising investment opportunity due to the company’s dominant position in the two-wheeler helmet market, its expanding international reach, and strong financial performance. While there are risks associated with market fluctuations and competition, the company’s growth potential and regulatory tailwinds make it an attractive option for investors looking for exposure to the growing two-wheeler safety sector.
