Lulu Share Prices Close Flat on ADX Trading Debut
Lulu Group, a UAE-based retail giant, saw its shares end flat on their debut at the Abu Dhabi Securities Exchange (ADX) on Thursday. The company had a successful initial public offering (IPO), raising Dh6.32 billion ($1.72 billion). Trading under the ticker “LULU,” shares closed at Dh2.04. This was the same as the opening price but had dipped to Dh1.99 earlier in the day. Despite this flat close, Lulu was the most traded stock on the ADX, with 248 million shares exchanged by the end of trading.
The IPO was priced at the top of its range and was oversubscribed by more than 25 times. Demand exceeded Dh135 billion from local, regional, and international investors. Analysts believe the modest debut performance may be due to a “price discovery” phase. This is a period when the market seeks to determine the fair value of the shares.
Joseph Dahrieh, managing principal at UK-based brokerage Tickmill, noted that this trading pattern is common after an IPO. Investors often work to establish the market value of the stock. He also mentioned that the price could experience volatility as more investors participate.
Lulu’s IPO is the largest listing in the UAE this year. It highlights the country’s growing role as a capital hub. Ghannam Al Mazrouei, chairman of ADX, remarked that Lulu’s listing shows the UAE’s efforts to diversify its economy. He noted the significant global investor demand for this year’s largest IPO.
Founded in 1974 by Indian-born businessman MA Yusuff Ali, Lulu operates one of the largest supermarket chains in the Gulf. The company has over 240 hypermarkets and shopping malls in 10 countries, including India, Egypt, Malaysia, and Indonesia. Lulu plans to continue expanding. It aims to open eight new branches in the UAE, Saudi Arabia, and Oman by the end of the year and add 19 new stores in 2025, mainly in the UAE and Saudi Arabia.
Lulu is targeting a 75% dividend payout ratio from its annual distributable profits after tax. This dividend will be paid semi-annually. The first dividend will be for the six months ending December 31 and the first half of next year.
Looking ahead, Lulu expects a 10% revenue growth for the year. The company anticipates strong performance in its core UAE market and notable expansion in Saudi Arabia. In the first half of 2024, Lulu’s revenue grew by 5.6% year-on-year to $3.9 billion. During the same period, its earnings before interest, taxes, depreciation, and amortization (EBITDA) rose by 4.3%.
Lulu’s CEO, Saifee Rupawala, highlighted the company’s commitment to growth. He expressed confidence in meeting guidance targets for 2024 and beyond. So far this year, Lulu has opened 16 new stores.
About The Author
