Chittorgarh.com Logo
Loading...

Iris Clothings NSE SME IPO review (May apply)

Review By Dilip Davda on Oct 2, 2018

•    Iris is manufacturing and marketing kids wears.
•    Products are sold under the brand name 'DoReMe'.
•    ICL’s financial track record is encouraging.
•    Issue is at attractive P/E against industry average.

ABOUT COMPANY:
Iris Clothings Ltd. (ICL) is engaged in the manufacturing, designing, branding and selling of kids wear under the brand name 'DoReMe' in India. This brand caters to the kids wear category mostly juniors including various kinds of apparels and related products for all infants, boys and girls. ICL has been able to establish 'DoReMe' as a mid-market, comfortable and high quality junior kids wear brand. The company makes different kinds of products like Tops, T-shirts, Pants, Shorts, Frock, Dresses and Towels among other catering to kids wear category. ICL continuously strives to add new product lines and innovate with designs to be able to appeal to the changing consumer demands with excellence in both cost and quality.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, ICL is coming out with a maiden IPO of 1230400 equity shares of Rs. 10 each at a fixed price of Rs. 90 per share to mobilize Rs. 11.07 cr. Issue opens for subscription on 10.10.18 and will close on 12.10.18. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 26.40% of post issue paid up capital of the company. Issue is solely lead managed by VC Corporate Advisors Pvt. Ltd. while Cameo Corporate Services Ltd. is the registrar to the issue. Having issued initial equity at par, ICL raised further equity at the price of Rs. 27 and Rs. 38 per share between July 2017 and June 2018. Average cost of acquisition of shares by the promoters is Rs. 2.44 and Rs. 10.45 per share. Post issue, ICL’s current paid up equity capital of Rs. 3.43 cr. will stand enhanced to Rs. 4.66 cr.

FINANCIAL PERFORMANCE:
On financial performance front, for last four fiscals, ICL has posted turnover/net profits of Rs. 30.09 cr. / Rs. 0.24 cr. (FY15), Rs. 36.99 cr. / Rs. 0.65 cr. (FY16), Rs. 46.89 cr. / Rs. 1.60 cr. (FY17) and Rs. 53.10 cr. / Rs. 3.38 cr. (FY18). For Q1 of FY19 it has earned net profit of Rs. 1.17 cr. on a turnover of Rs. 14.85 cr. Thus it has posted steady growth in top and bottom lines. For last three fiscals, it has posted an average EPS of Rs. 6.42 and an average RoNW of 22.33%. Issue is priced at a P/BV of 1.92 based on its NAV of Rs. 46.89 as on 30.06.18 and at a P/BV of 1.70 based on post issue NAV of Rs. 53.00. If we annualize its FY19 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 9 making it attractively priced issue against industry average of 40.

COMPARE WITH LISTED PEERS:
As per offer documents, it has shown Ashapura Intimate, Indian Terrain, S P Apparels as its listed peers that are currently trading at a P/Es of around  12, 19 and 16 (as on 01.10.18). However, they are not strictly comparable with this company.

MERCHANT BANKER’S TRACK RECORD:
On merchant banker’s front, this is the 4th mandate from its stable in last nine years. Last mandate was in Sept. 2014 of Sirohia & Sons that opened at a discount to offer price on listing day and currently quotes at a discount of around 28%. Even first two mandates of 2010 and 2012 opened at discount and except for the first one, others are quoting at discount as per last quotes. Thus it has poor track record.


Conclusion / Investment Strategy

Issue is attractively priced. Encouraging financial track record indicates future prospects. LM’s track record is the concern.  Investors may consider investment in this kids wear sector issue for long term.

Review By Dilip Davda on Oct 2, 2018

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

Iris Clothings DoReMe IPO FAQs

  1. 1. Why Iris Clothings DoReMe IPO?

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

  2. 2. How is Iris Clothings DoReMe IPO?

    Read the Iris Clothings DoReMe IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Iris Clothings DoReMe IPO what should investors do?

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

  4. 4. Is Iris Clothings DoReMe IPO good?

    Our recommendation for Iris Clothings DoReMe IPO is to subscribe for long term.

  5. 5. Is Iris Clothings DoReMe IPO worth Investing?

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

  6. 6. When will Iris Clothings DoReMe IPO allotment status?

    The Iris Clothings DoReMe IPO allotment status will be available on or around Oct 17, 2018. The allotted shares will be credited in demat account by Oct 19, 2018. Visit Iris Clothings DoReMe IPO allotment status to check.

  7. 7. When will Iris Clothings DoReMe IPO list?

    The Iris Clothings DoReMe IPO will list on Tuesday, October 23, 2018, at NSE SME.