Marc Loire BSE SME IPO review (May apply)

•    The company is engaged in women’s footwear products with over 800 unique styles.
•    It posted marginal growth in its top lines, but boosted bottom lines from FY24 raise eyebrows and concern over its sustainability as it operates in a highly competitive and fragmented segment.
•    Based on its recent financial data, the issue appears fully priced.
•    Well-informed investors may park funds for medium term.

ABOUT COMPANY:
Marc Loire Fashions Ltd. (MLFL) is engaged in Women’s Footwear Products, boasting an impressive catalogue of over 800 unique styles that cater to a broad spectrum of tastes and occasions. Its collection includes party heels, ethnic flats, wedges, winter boots, mules, formal heels, loafers, cork sandals, arc-supported flats, athleisure and activewear footwear, sneakers and other styles that blend comfort with fashion. This diversity allows MLFL to cater to every need, from everyday wear to special occasions, providing customers with wide range of options to express their style.

MLFL operates through a dual business model encompassing both Direct-to-Consumer (D2C) and Business-to-Business (B2B) strategies. Its D2C model allows to connect directly with end customers via various online platforms, ensuring a seamless and personalized shopping experience. Simultaneously, its B2B operations strengthen reach through offline retail relationships with wholesalers, Shop-in-Shop Stores, enabling widespread market penetration. The company manages its operations, leveraging a network of more than 40 trusted vendors for raw materials and finished goods. This vendor network includes two promoter group entities, allowing it to ensure quality control and maintain seamless production flows. As of May 31, 2025, it had 20 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 2100000 equity shares of Rs. 10 each at a fixed price of Rs. 100 per share to mobilize Rs. 21.00 cr. The issue opens for subscription on June 30, 2025, and will close on July 02, 2025. The minimum number of shares to be applied is for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 29.58% of the post-IPO paid-up capital of the company. The company is spending Rs. 2.25 cr. for this IPO process, and from the net proceeds, the company will utilize Rs. 5.27 cr. for capex on 15 new exclusive brand outlets, 0.40 cr. for capex on multipurpose racks, Rs. 9.35 cr. for working capital, and Rs. 3.73 cr. for general corporate purposes. 

The IPO is solely lead managed by Finshore Management Services Ltd., and Maashitla Securities Pvt. Ltd., is the registrar to the issue. JSK Securities & Services Pvt. Ltd. is the market maker.

The company has issued initial equity shares at par value. It has issued bonus shares in the ratio of 4 for 1 in September 2024. The average cost of acquisition of shares by the promoters is Rs. 2.00 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 5.00 cr. will stand enhanced to Rs. 7.10 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 71.00 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 37.44 cr. / Rs. 0.66 cr. (FY23), Rs. 40.40 cr. / Rs. 4.08 cr. (FY24), Rs. 42.46 cr. / Rs. 4.71 cr. (FY25). The company posted marginal growth in its top lines for the reported periods, but marked bumper net profits for FY24 and FY25 that raises eyebrows and concern over its sustainability going forward.

For the last three fiscals, the company has reported an average EPS of Rs. 7.64 and an average RoNW of 49.88%. The issue is priced at a P/BV of 4.65 based on its NAV of Rs. 21.51 as of March 31, 2025, and at a P/BV of 2.24 based on its post-IPO NAV of Rs. 44.73 per share.

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 15.08. Based on FY24 earnings, the P/E stands at 17.42. The issue relatively appears fully priced. 

For the reported periods, the company has posted PAT margins of 1.75% (FY23), 10.09%, (FY24), 11.08% (FY25), and RoCE margins of 44.75%, 91.45%, 60.56%, respectively for the referred periods.

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Liberty Shoes, Lehar Footwear, Sreeleathers, as their listed peers. They are trading at a P/E of 45.6, 41.3, and 25.6 (as of June 27, 2025). However, they are not truly comparable on an apple-to-apple basis. 

MERCHANT BANKER’S TRACK RECORD:
This is the 25th mandate from Finshore Management in the last four fiscals, including the ongoing one.  From the last 10 listings, 1 opened at par, and the rest with a premium ranging from 94.44% on the listing date.