Review By Dilip Davda on November 26, 2014
MCFL primarily cater to the premium and mid-premium branded apparel segment for men, women and kids, offering a comprehensive line of woollen, cotton and cotton blended knitted and woven apparel and home furnishings through our ‘Monte Carlo Exclusive Brand Outlets’ and multi brand outlets (“MBOs”), including a network of national chain stores under the ‘Monte Carlo’ brand.
The objects of the Offer are to achieve the benefits of listing the Equity Shares on the Stock Exchanges and for the sale of 5,433,016 Equity Shares by the Selling Shareholders. The Company will not receive any proceeds of the Offer. Price Band has been fixed at Rs. 630-645 and the issue is opening on 03.12.14 and will close on 05.12.14. Anchor book opens for subscription on 02.12.14. Minimum application is to be made for 23 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. This offer neither has any discount to retail investors, nor a “Safety Net”. The offer will mobilize Rs. 342.28 /Rs.350.42 based on lower/upper price bands. This being offer for sale from PE Investor and promoters, equity capital will remain at Rs. 21.73 crore. The company issued bonus in the ratio of 1 for 1 prior to preferential offer at a price of Rs. 56 per share in September 2011. In June 2012, it issued 18.51% stake at a price of Rs. 435 to Samara Capital. Current offer consists 25% of the equity which included offer for sale from promoters (17.42%) and Samara (7.58%).
MCFL operates two manufacturing facilities in Ludhiana, Punjab, one for woollen apparel products and another for cotton apparel products. The manufacturing facilities include facilities for product development, a design studio and sampling infrastructure. The ‘Monte Carlo’ brand was launched by OWML, which was engaged in spinning of woollen, cotton and other blended yarns, weaving denim fabric and manufacture of apparel. With effect from April 1, 2011, the woollen and cotton apparel business of OWML under the brand ‘Monte Carlo’ was demerged into MCFL.
On performance front, the company posted an average EPS of Rs. 25 for last three fiscals. On this basis the asking price is at a P/E of 25 plus. For the current fiscal, it has earned net profit of Rs. 8.52 on a turnover of Rs. 79.23 crore for the first quarter. Management claimed that their second half always sees better performance. However, based on Q1 performance if we annualized the earnings, then the asking price is at a P/E of 40 plus.
This issue is lead managed by SBI Capital Markets Ltd, Axis Capital Ltd, Edelweiss Financial Services Ltd. and Religare Capital Markets Ltd. Link Intime India Pvt Ltd is the registrar to the issue. Team of four BRLMs has mixed trends for their past mandates.
There is a murmur on the streets that as MCFL spoiled its name with deferment of the IPO earlier, in a bid to regain its credit, the grey market operation is in place from the concerned entities with hand in gloves to lure the investor masses. The grey market premium may not sustain till listing, opines seasoned operators. OWM/Nahar group, the main promoters of MCFL has low fancy among broking and investors community due to their most conservative approach and inconsistent track record.
The issue is highly priced one and the group has no fancy among Investors and Brokers, hence investment in this IPO may be made by investors at their own discretion. It’s a high risk-low yield offer.
Review By Dilip Davda on November 26, 2014
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst ā Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of Monte Carlo Fashions Ltd. offers an early investment opportunity in Monte Carlo Fashions Ltd.. A stock market investor can buy Monte Carlo Fashions IPO shares by applying in IPO before Monte Carlo Fashions Ltd. shares get listed at the stock exchanges. An investor could invest in Monte Carlo Fashions IPO for short term listing gain or a long term.
Read the Monte Carlo Fashions IPO recommendations by the leading analyst and leading stock brokers.
Monte Carlo Fashions IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Monte Carlo Fashions IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Monte Carlo Fashions IPO?"
Our recommendation for Monte Carlo Fashions IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Monte Carlo Fashions IPO.
The Monte Carlo Fashions IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Monte Carlo Fashions IPO allotment status to check.
