Review By Wealth Rays Securities on December 1, 2014
India in one of the largest exporters of textile and apparels, 60% of the contribution comes from Apparel and 40% from textiles. Industry is seen growing at CAGR of 8% in between 2009 to 2013. India's textile and apparel industry is expected to grow at CAGR of 9%. Indian markets are dominated by unorganized markets; organized retail is expected to cover 25% by the end of next year.
Monte Carlo is one of the leading Indian apparel brands based on revenue specialized in premium and mid-premium winter wear in the northern and eastern regions of India with everyday formal and casual wear. The brand is established in 22 states with their exclusive outlets and multi brand outlets. Company has 190 outlets of which 80 are owned by the company and the rest are franchisee. Company is seen growing at CAGR of 17% from 2012 to 2014. With two manufacturing units in Ludhiana, Punjab, the company has well developed infrastructure.
Company plans to raise 350 crore through this IPO by issuing 54.33 lakh equity shares of Rs. 10 face value for a price consideration between 630-645. With the help of this IPO the company plans to start own e-commerce facility which is currently run under the group company.
1. Company is well established in Indian markets with all season Indian apparels and has wide distribution network.
2. With strong industry connections, the company is stable and has reliable sourcing of its raw materials.
3. Company is more focused on opening nationwide exclusive retail outlets. Along that starting of their e-commerce platform would provide an edge.
4. Company is planning to expand its manufacturing facilities and also acquire other brands to gain market access in apparel industry.
1. With less presence in Southern and western part of the country, the expansion planning could hamper the business strategy and growth.
2. With increase in competition and other major players in the market is one of the threats for the company.
3. Change in trend of the apparel industry has to be well adjusted by the company and any failure in adapting the changes could hamper their revenue and growth.
4. Funds raised from IPO would be marginally used for expansion and more on sale of shares by Selling Shareholders.
5. Negative cash flows from operating activities were seen in fiscal year 2012 also from investing activities in fiscal year 2012, 2013 and 2014.
The revenue of the company has grown at a rate of 10% for 2012-13 and at a rate of 24% of 2013-14. The revenue for the company didn't grow as expected in the previous quarter but the revenue is still seen as steady. Profitability for the company is seen and it has consistently managed to maintain its PAT in the 10-12% range. Sustainability is seen good for the company moving into the future.
The current EPS for the company is seen at 25 and considering the price band of Rs 630 – 645, P/E is seen at approximately 25.7 to 26. Some of its peers like Zodiac clothing have a P/E ratio of 50.78 while Kewal Kiran Clothing Limited has a P/E ratio of 31.68. Considering these number, the price band for the company appears to be reasonably priced.
The brand image is seen unique for the company and it has good revenue growth and consistent profits. The company also has a diverse business and has enjoyed good operational performance for the last 3 to 4 years. Considering these factors and the numbers indicated above, we recommend Monte Carlo as a good investment in the current price band.
Review By Wealth Rays Securities on December 1, 2014
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 subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to 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.
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