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Brand Concepts NSE SME IPO review (May apply)

Review By Dilip Davda on Dec 27, 2017

Brand Concepts Ltd. (BCL) is a premier resource for licensed fashion and lifestyle brands in category - travel gears, bags and accessories. Its well-rounded portfolio and expansive product offering establish the company as the go-to resource for travel gears, bags and accessories across all channels of distribution. BCL is a leader in category for many reasons–design, quality and knowledge of the product based on its lengthy experience. It is dedicated to developing brands and products for Customers and Consumers that create more enriched lives. Within Brand Concepts portfolio are some of the international and domestic top travel gears, bags and accessories licenses, which the licensee brings to life through its creativity, fashion intelligence and deep research to establish the DNA of the license, which shines in the company's licensed character segment of the business. BCL represents a wide mix of International and domestic brands, including but not limited to Tommy Hilfiger, AND, HEAD and Global Desi. It has exclusive franchise of Tommy Hilfiger and Trademark licenses of AND, HEAD and Global Desi. In addition to the licensed brands it has also launched two of own brands i.e. Sugarush (ladies hand bags) and The Vertical (backpacks). It has now added bags, backpacks small leather goods, and ladies hand bags in the product portfolio. BCL has 12 EBOs (Exclusive Brand Outlets) and 10 MBOs (Multi Brand Outlets), which are present across the country. Products are also sold at Large departmental stores and on e-commerce website apart from though dealer distribution network.

To part finance working capital and general corpus fund needs, BCL is coming out with a maiden IPO of 2805000 shares of Rs. 10 each at a fixed price of Rs. 45 per share to mobilize Rs. 12.62 crore. Issue opens for subscription on 29.12.17 and will close on 02.01.18. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 26.51% of the post issue paid up capital of the company. Issue is solely lead managed by Sarthi Capital Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Since incorporation till March 2015 it raised equity at par except 1000000 shares at a price of Rs. 20 per share in August 2010. Thereafter, it issued equities at a price of Rs. 68.56 and Rs. 102.86 per share for conversion of CCPs and fresh shares in November 2017. Average cost of acquisition of shares by the promoters is Rs. 10.30, Rs. 11.11 and Rs. 18.33 per share. Post issue its current paid up capital of Rs. 7.78 crore will stand enhanced to Rs. 10.58 crore.

On performance front, having suffered losses in FY13 and 14, BCL has posted turnover/net profits of Rs. 38.75 cr. / Rs.1.32 cr. (FY15), Rs. 50.66 cr. / Rs. 0.91 cr. (FY16) and Rs. 62.46 cr. / Rs. 1.44 cr. (FY17). For the first quarter of the current fiscal, it has reported loss of Rs. – (0.92) cr. on a turnover of Rs. 10.88 crore. For last three fiscals, it has posted an average EPS of Rs. 1.77 and an average RoNW of 40.50% on an equity base of Rs. 7.00 crore(Equity). In fact, it has a capital of Rs. 14 crore as on 30.06.17 that included Rs. 7 crore equity shares and Rs. 7 crore worth CCPs. BCL has carried forward losses of Rs. – (4.71) crore on the same date translating into negative net worth. Although it has shown VIP and Safari as its peer and P/E ratios on the basis of performance as on 31.3.17 is well comparable, on performance front, it is legging much behind. (See page 103 of the offer document). Considering negative earnings for Q1 and the carried forward losses, P/E and P/BV ratios are not ascertained. It has shown inconsistency in bottom lines for last three fiscals.

On merchant banker’s front, this is the 37th mandate from its stable so far (28th in last three fiscals). Out of last 11 listings, 2 opened below the offer price, 1 at par and the rest at a premium ranging from 4% to 131% on the offer price on the day of listings. 131% gain was for the maiden main board IPO of Salasar Techno.


Conclusion: Considering carried forward losses and inconsistency in bottom lines for last three fiscals, issue is priced very aggressively. Cash surplus, risk savvy investors may consider investment for long term. (Others).


Conclusion / Investment Strategy

Considering carried forward losses and inconsistency in bottom lines for last three fiscals, issue is priced very aggressively. Cash surplus, risk savvy investors may consider investment for long term. (Others).

Review By Dilip Davda on Dec 27, 2017

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

Brand Concepts IPO FAQs

  1. 1. Why Brand Concepts IPO?

    The initial public offer (IPO) of Brand Concepts Limited offers an early investment opportunity in Brand Concepts Limited. A stock market investor can buy Brand Concepts IPO shares by applying in IPO before Brand Concepts Limited shares get listed at the stock exchanges. An investor could invest in Brand Concepts IPO for short term listing gain or a long term.

  2. 2. How is Brand Concepts IPO?

    Read the Brand Concepts IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Brand Concepts IPO what should investors do?

    Brand Concepts IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Brand Concepts IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Brand Concepts IPO good?

    Our recommendation for Brand Concepts IPO is to subscribe for long term.

  5. 5. Is Brand Concepts IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Brand Concepts IPO.

  6. 6. When will Brand Concepts IPO allotment status?

    The Brand Concepts IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Brand Concepts IPO allotment status to check.

  7. 7. When will Brand Concepts IPO list?

    The Brand Concepts IPO will list on Wednesday, January 10, 2018, at NSE SME.

1 Comments

1. High Flyer  Jan 13, 2018 9:27:02 AM
Fascinating returns from Brand Concepts has come but no single allotment out of 3 applications