Scaling up

Biyanis buy stock worth ₹21 crore in Praxis Home Retail

After its debut on the stock market on January 31, Praxis Home Retail’s stock price has fallen from the high of Rs.315 to Rs.256 on April 17 on BSE. As the stock continues to plunge, Avni Biyani and Sangita Biyani’s Surplus Finvest acquired 10.91 lakh shares worth Rs.21 crore on April 12. The promoters currently own 47% with Surplus Finvest's share going up from 4.96% to 9.32% after the recent acquisition. Prior to this, Surplus Finvest had bought 12 lakh shares worth Rs.21.79 crore on March 28.

Praxis Home Retail manufactures furniture, homeware, customised solutions in kitchen and wardrobe and sells its wares through 41 stores across 23 cities. The Biyani-led Future Group retail chain last year merged home furnishing brand HomeTown with FabFurnish under Praxis Home Retail and decided to list it on the stock market. HomeTown was the largest retailer on the FabFurnish portal, which was acquired by Kishore Biyani from Rocket Internet for Rs.20 crore in 2016. It reportedly had a turnover of Rs.187.36 crore, which was 2.79% of the total turnover of Future Group as of FY16.

After sluggish growth for a decade, India’s organised retail market is set to benefit from tailwinds generated by demonetisation and implementation of the Good and Services Tax (GST). The improved prospects of retail companies have boosted the price of the stocks. The stock price of retail giants Future Group and V-mart have gone up 115% and 137% respectively.

However, the performance of Praxis Home Retail has failed to match the optimism surrounding big retail companies. The company recorded revenue of Rs.143 crore with a flat net profit in December 2017. Even the company’s net profit margin and earnings per share remained stagnant. The stock has received a mixed response from domestic mutual funds. IDFC Mutual Fund has increased its stake marginally to 1.01% in March 2018. While Tata Mutual Fund entered Praxis Home Retail’s holding with a meagre 0.092%, L&T Mutual Fund, Kotak Mahindra Mutual Fund, Edelweiss Mutual Fund and BOI AXA Mutual Fund exited in December 2017.     

Foreign investment currently accounts for 17.47% with major investors such as Arisaig India Fund Limited, WGI Emerging Markets Smaller Companies Fund and Government Pension Fund Global holding 4.52%, 1.51% and 1.26%, respectively.