The initial public offering (IPO) of Fonebox Retail Ltd, a multi-brand smartphone and accessories retail company, has seen a strong grey market premium (GMP) ahead of its listing. With a GMP of Rs 120 indicating a 171% listing expectation, Let’s analyze the company and offering.
About Fonebox Retail Ltd
Fonebox Retail Ltd, a multi-brand retailer of smartphones and allied accessories, was established as “Fonebox Retail Private Limited” on February 5, 2014, under the Companies Act, 2013. The company, incorporated on August 21, 2013, launched an IPO on January 25, 2024, closing on January 30, 2024. Notably, the IPO received a remarkable 17.99 times subscription in the retail category, with a minimal 0.05 times in the non-institutional category.
| Company Name | Fonebox Retail Ltd |
| Type of Company | Multi-brand retailer of smartphones and allied accessories |
| Date of Incorporation | August 21, 2013 |
| Date of Conversion to Public Limited Company | February 5, 2014 |
| IPO Launch Date | January 25, 2024 |
| IPO Closing Date | January 30, 2024 |
| IPO Retail Subscription | 17.99 times |
| IPO Non-Institutional Subscription | 0.05 times |
| Grey Market Premium | Rs 120 (171.43% listing expectation) |
| Strengths | – Experienced management team <br>- Extensive distribution network |
The Grey market premium (GMP) stood at Rs 120, indicating a 171.43% listing expectation. While the company boasts strengths like an experienced management team and extensive distribution network, risks include operational disruptions, reliance on franchisee agreements, negative cash flow, low profit margins, and supplier dependency.
Fonebox IPO Allotment and Listing
The IPO of Fonebox Retail opened on Jan 25, 2024, and closed on Jan 30, 2024. The IPO saw a bumper 17.99 times subscription in the retail category, with HNIs also showing interest.
| IPO Allotment Date | January 31, 2024 |
| Refund Initiation | February 1, 2024 |
| Shares Credited to Demat | February 1, 2024 |
| Expected Listing Date | February 2, 2024 |
The IPO proceeds will be mainly utilized for funding working capital requirements as the company looks to expand its distribution network. The IPO allotment was completed on Jan 31, 2024. And Fonebox Retail made its debut on the NSE SME platform on Feb 2 amid high investor interest.
Fonebox IPO Key Strengths
With a grey market premium of Rs 120, the unlisted shares of Fonebox Retail were trading at Rs 190 against the IPO price band of Rs 66-70 per share. This points towards strong listing gains in the range of 170-185%.
Here are some key factors contributing to the high investor interest:
- Pan-India distribution network making products easily available
- Strong growth is expected in the smartphone user base and accessory market
- Promoters’ experience ensuring smooth expansion and operations
- The company already profitable at the operating level
Fonebox IPO Revenue Growth:
As of January 24, 2024, the grey market premium (GMP) for Fonebox Retail Ltd was Rs 50, which increased to Rs 120 on January 25, 2024. The GMP of Rs 120 indicates a 171.43% listing expectation.
However, it is important to note that the GMP is based on market sentiments and keeps changing
In terms of strengths, Fonebox Retail Ltd has experienced promoters and a skilled management team, an extensive network for widespread distribution, a diverse range of products, and a wide range of smartphones and accessories from reputable brands.
Subscription Status of Fonebox IPO
The Fonebox Retail IPO witnessed exceptional demand, receiving an overall subscription of 14.65 times.
| Category | Subscription Rate |
|---|---|
| Retail | 17.99 times |
| Non-Institutional | 0.05 times |
| Overall | 14.65 times |
However, subscription was primarily driven by retail investors, with the retail portion subscribed 17.99 times. Non-institutions showed relatively lower interest, subscribing just 0.05 times. The strong retail interest indicates that the company’s growth prospects and positive profitability attracted smaller investors to the IPO. The IPO subscription window was open from January 25, 2024, to January 30, 2024. These figures illustrate significant investor interest, especially from retail investors.
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How to Apply for Fonebox IPO
Retail investors looking to apply for the Fonebox IPO could do so before Jan 30 by following these simple steps:
- Open a demat and trading account with a broker
- Login to the broker’s platform
- Search for Fonebox IPO in broker’s IPO section
- Enter details like no. of shares and price
- Make payment through UPI or ASBA
- Approve mandate requests in the UPI app
- Bank to block funds via UPI ID
- Submit application and complete the KYC process
Investors were required to have a Demat account to apply for the IPO. Applications without a demat account would be rejected.
How to check Fonebox IPO Allotment Status:
To check Fonebox IPO allotment status:
- Visit the KFIN Technologies website.
- Select “Fonebox Retail” from the dropdown menu.
- Enter PAN, application number, or Demat.
- Complete captcha.
- Alternatively, check on the KFintech website with the same steps.
- Also, monitor status in Demat or bank account.
- Allotment was finalized on January 31, 2024.
- Listing date: February 2, 2024.
Positive Aspects & Risks of Fonebox Retail Ltd IPO
Here is a balanced look at some of the key positives as well as the risks retail investors should consider before deciding to buy into the already-concluded IPO:
Positives Aspects:
- Experienced Promoters and Management Team: The company benefits from a team of experienced promoters and skilled management personnel.
- Extensive Distribution Network: Fonebox Retail boasts an extensive distribution network, providing a competitive edge in the retail sector.
- Diverse Product Range: Offering a wide array of smartphones and accessories from reputable brands diversifies its product portfolio, appealing to a broad customer base.
- Strong IPO Subscription: The overwhelming response to the IPO, particularly in the retail category, indicates strong investor confidence and interest in the company’s future prospects.
Risks:
- Operational Disruptions: Past lease agreements and pending shop registrations could potentially disrupt operations, impacting the company’s business.
- Reliance on Franchisee Agreements: Dependency on franchisee agreements poses a risk, as non-renewals or poorly executed agreements could disrupt operations.
- Negative Cash Flow: Recent negative cash flow from operating activities raises concerns about the company’s financial health and operational results if prolonged.
- Low-Profit Margins: Operating in a business with high sales but low-profit margins poses a risk to its financial performance.
- Supplier Dependency: Dependency on a small number of key suppliers increases vulnerability to supply chain disruptions, impacting business operations.
Investors should carefully weigh these factors against potential returns and the company’s financial performance before deciding on investing in the Fonebox Retail Ltd IPO.
Conclusion
Strong Premium Justifies ‘Subscribe’ Call for Investors Considering the company’s strengths like experienced founders, profitable operations, and the Indian smartphone sector’s strong growth outlook, Fonebox Retail IPO received an overwhelming response. The >170% GMP signals continued strong listing gains providing opportunities for solid returns to investors. Thus the analysts’ consensus “Subscribe” recommendation for the IPO seems justified.
However, investors should be aware of prevalent market conditions, IPO valuations, and their own risk appetite before participating in any public issue, including Fonebox Retail’s.