Monte Carlo Fashions Limited IPO Review (Avoid)

Review By Dilip Davda on Nov 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.


Conclusion / Investment Strategy

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.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Nov 26, 2014

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. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

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

Monte Carlo IPO FAQs

  1. 1. Why Monte Carlo IPO?

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

  2. 2. How is Monte Carlo IPO?

    Read the Monte Carlo IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Monte Carlo IPO what should investors do?

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

  4. 4. Is Monte Carlo IPO good?

    Our recommendation for Monte Carlo IPO is to avoid.

  5. 5. Is Monte Carlo IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Monte Carlo IPO.

  6. 6. When will Monte Carlo IPO allotment status?

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

  7. 7. When will Monte Carlo IPO list?

    The Monte Carlo IPO will list on Friday, December 19, 2014, at BSE, NSE.








Search Chittorgarh.com:

Download Our Mobile App

Android App iOS App