Stock Outlook: Jawed Habib IPO

by khalid on 09/09/2011 · 0 comments

A one man company, Jawed Habib Akhter, the very well known hair expert, started the company in 2006. Over the years, his brand name has not only made them one of the most popular hair and beauty salons in the country, it has also generated for them a turnover of around Rs.196 million and now they are looking at and IPO.

With a net worth of 23 million rupees, they company now has 176 franchisees all across the country and has also expanded its fore in training institutes for hair styling and beauty enhancements. Past records report an ROE of 35% while PAT margins hover around 3-4%.

Reportedly, on knowing the IPO allotment status, the proceeds from the IPO shall be allocated proportionately to acquiring brands, brand building, opening exclusive brand stores, and certain ERP software.

The company is based on a franchise system of expansion and has brought about organization to a largely unorganized hair and beauty industry. The training centre has also identified the niche where dearth of professional hair stylist is being addressed.

However the investor considering the IPO shall also look at a few considerations that might render the investment opportunity unfruitful. Non maintenance of standardized quality products and services throughout, cutting out competition etc could dilute the identity of the brand. Integration and positioning of other future acquisition is also one tough challenge. Promoter led branding is also a high risk factor because the company suffers with any litigation against the promoter.

Therefore the company should concentrate on its second line management issues and growth processes before the IPO allotment status.

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