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Lorenzini Apparels BSE SME IPO Review (May apply)

Review By Dilip Davda on Jan 27, 2018

Lorenzini Apparels Ltd. (LAL) is engaged into the business of manufacturing, designing and marketing of readymade garments offering diverse range of formal, semi-formal and casual wear for men and casual wear for women. Company serves its customers through the channels of retail and e-commerce. It also outsource the garments manufacturing on job work basis from third party contractors from time to time and provides the technical specifications such as designs, pattern, quality, fabric etc. to them who, based on LAL’s specifications, procure the requisite raw materials at their own costs and begin the manufacturing process. The products are sold under its own brand name “Monteil & Munero” and “Monteil” “Calgari” through exclusive stores/outlets located at several places of Delhi, Haryana and Uttar Pradesh.

To part finance its working capital and general corpus fund needs, LAL is coming out with a maiden IPO of 4470000 equity shares of Rs. 10 each at par to mobilize Rs. 4.47 crore. Issue opens for subscription on 31.01.18 and will close on 06.02.18 Minimum application is to be made for 10000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Fedex Securities Ltd. and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. While filing draft prospectus, lead manager was Guiness Corporate Advisors Pvt. Ltd. Thus change in lead manager for final documents is surprising one. Issue constitutes 44.09% of the post issue paid up capital of the company. Having issued initial equity at par, it raised further equity in the price range of Rs. 10.60 to Rs. 13.50 between March 2017 and July 2017 and has also issued bonus shares in the ratio of 44 for 1 in February 2017 and 3 for 10 in June 2017. Average cost of acquisition of shares by the promoters is Rs. 1.56 and Rs. 10.38 per share. Post issue, its current paid up equity capital of Rs.5.67 crore will stand enhanced to Rs.10.14 crore.

On performance front, LAL has posted turnover/net profits of Rs. 11.60 cr. / Rs. 0.12 cr. (FY14),Rs. 14.16 cr. / Rs. 0.06 cr. (FY15), Rs. 12.11 cr. / Rs. -0.03 cr. (FY16) and Rs. 16.45 cr. / Rs. 0.15 cr. (FY17). Thus it has marked inconsistency in its performances. For first four months of the current fiscal ended on 31.07.17, it has earned net profit of Rs. 0.28 crore on a turnover of Rs. 6.63 crore. Thus sudden jump in top and bottom lines in last sixteen months is a bit surprising. Company has given details only for first four months of the current fiscal instead of first half. Issue at par is at a P/BV below 1. For last three fiscals it has posted an average EPS of Rs. 0.79 and an average RoNW of 2.04%. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 12 plus against its peers Cantabil, Monte Carlo and Mandhana are trading at a P/Es ranging from 16 to 25.

On merchant banker’s front, this is the 2nd mandate from its stable in last three fiscals and the only listing took place so far that of Shree Ganesh Remedies opened at offer price and closed at a discount of 18% on listing date.


Conclusion / Investment Strategy

Textile segment is likely to get more relaxed regime being a job oriented sector. Industry is expecting many sops from forthcoming budget. Considering all these, investment may be considered in this at par issue for long term

Review By Dilip Davda on Jan 27, 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

Lorenzini Apparels IPO FAQs

  1. 1. Why Lorenzini Apparels IPO?

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

  2. 2. How is Lorenzini Apparels IPO?

    Read the Lorenzini Apparels IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Lorenzini Apparels IPO what should investors do?

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

  4. 4. Is Lorenzini Apparels IPO good?

    Our recommendation for Lorenzini Apparels IPO is to subscribe for long term.

  5. 5. Is Lorenzini Apparels IPO worth Investing?

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

  6. 6. When will Lorenzini Apparels IPO allotment status?

    The Lorenzini Apparels IPO allotment status will be available on or around Feb 9, 2018. The allotted shares will be credited in demat account by Feb 14, 2018. Visit Lorenzini Apparels IPO allotment status to check.

  7. 7. When will Lorenzini Apparels IPO list?

    The Lorenzini Apparels IPO will list on Thursday, February 15, 2018, at BSE SME.