Stanley Lifestyles IPO: Here are 10 key risks from the RHP you should know

Here are 10 key risks from the RHP to know before investing

1.Stanley Lifestyles does not own the brand name “Stanley” which is registered in the name of one of its Promoters, Sunil Suresh. While Stanley Lifestyles have entered into the Assignment Deeds with Sunil Suresh, however, the trademarks are yet to be registered in its name. Further, one of our Promoters, Sunil Suresh has entered into a co-existence agreement with Stanley Furniture Company, Inc to limit and restrict the use of the term “Stanley” as a trademark in a composite manner in respect of products.

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 In the event that the intellectual property rights to be assigned to Stanley Lifestyles pursuant to the Assignment Deeds are not registered in its name in a timely manner or any breach or termination of the co-existence agreement occurs, it may adversely affect Stanley Lifestyles business and financial condition.

2.  Stanley Lifestyle business is highly dependent on the sale of sofas and recliners. Variations in demand and changes in consumer preference for its sofa and recliner products could have an adverse effect on its business, results of operations and financial condition.

3.Stanley Lifestyle does not have any listed industry peers in India or abroad and it may be difficult to benchmark and evaluate its financial performance against other operators who operate in the same industry as Stanley Lifestyle .

4. Stanley Lifestyle generated a substantial portion of its sales from its stores located in southern regions of India and any adverse developments affecting its operations in these regions could have an adverse impact on our revenue and results of operations.

5. Any delay, interruption, or reduction in the supply of key raw materials such as leather and wood required to manufacture its products may adversely affect its business, results of operations, cash flows and financial condition.

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6. Stanley Lifestyle depends on limited suppliers for the supply of leather, one of its primary raw materials. The loss of one or more such suppliers could adversely affect its business, results of operations, financial condition and cash flows.

7. If Stanley Lifestyle is unable to effectively manage or expand its retail network and operations or pursue its growth strategy, its new stores as well as its existing stores may not achieve the expected level of profitability which may adversely affect its business prospects, financial condition and results of operations.

8. Stanley Lifestyle is reliant on its company owned company operated stores for a majority of its sales. Any disruptions to the operations of these channels or limitations on its ability to expand and grow these channels may adversely affect Stanley Lifestyle sales, cash flow and profit

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9. A portion of its revenue from operations is generated from certain of its corporate customers. In the event such corporate customers do not continue to outsource manufacturing or avail its services, its sales, cash flows and profitability may be adversely affected. 

10. Stanley Lifestyle funding requirements and the proposed deployment of Net Proceeds are not appraised by any bank financial institution, or any other independent agency, and Stanley Lifestyle have not entered into definitive agreements in relation to the objects of the Offer, which may affect its business and results of operations. Further, the schedule of the implementation of the Objects for which funds are being raised in the Offer is spread between Fiscal 2025 to Fiscal 2027 and is therefore subject to risk of cost escalations and other unanticipated delays in implementation.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

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Published: 21 Jun 2024, 04:16 PM IST