TCNS Clothing IPO Review (Subscribe for Long Term)

Review By Dilip Davda on Jul 11, 2018

TCNS Clothing Co. Ltd. (TCNS) is India's one of the leading women's branded apparel company in terms of total number of exclusive brand outlets as of May 2018 (according to Technopak). It designs, manufactures, markets and retails a wide portfolio of women's branded apparel across multiple brands across India and through multiple distribution channels. As of March 31, 2018, TCNS sold its products through 465 exclusive brand outlets, 1,469 large format store outlets and 1,522 multi-brand outlets, located in 31 states and union territories in India. It also sold products through six exclusive brand outlets in Nepal, Mauritius and Sri Lanka. In addition, TCNS sold its products through own website and online retailers.

Company's product portfolio includes top-wear, bottom-wear, drapes, combination-sets and accessories that cater to a wide variety of the wardrobe requirements of the Indian woman, including every-day wear, casual wear, work wear and occasion wear. TCNS sells its products under three brands i.e. "W", "Aurelia" and "Wishful". The company operates with capital efficiency and scalable business model. It is a debt free company and having asset light business model. It has long standing relationship with suppliers and job workers.

TCNS

For listing gains and unlocking value for stakeholders, TCNS is coming out with a maiden IPO of 15714038 equity shares of Rs. 2 each via book building route. It is an offer for sale and price band is fixed at Rs. 714-716. Company hopes to mobilize Rs. 1121.98-1125.13 cr. based on lower and upper price bands. Issue opens for subscription on 18.07.18 and will close on 20.07.18. Minimum application is to be made for 20 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE/NSE. Issue constitutes 25.63% of the post issue paid up capital of the company. Being secondary offer, its post issue equity remains at Rs. 12.26 cr. Having issued initial equity at par, it raised further equity in the price range of Rs. 4.36 to Rs. 373.26 per share (on the basis of FV of Rs. 2 per share – between March 2004 and June 2018). BRLM's to this issue are Kotak Mahindra Capital Co. Ltd. and Citigroup Global Markets India Pvt. Ltd. Karvy Computershare Pvt. Ltd. is the registrar to the issue. Average cost of acquisition of shares by the promoters is Rs. 13.47 and Rs. 30.53 per share. Average cost of acquisition of shares by selling shareholders is in the range of Rs. 2 to Rs. 373.26 per share.

On performance front, for last three fiscals, TCNS has posted turnover/net profits of Rs. 488.14 cr. / Rs. – (41.50) cr. (on proforma basis) (FY16), Rs. 712.97 cr. / Rs. 15.80 cr. (FY17) and Rs. 849.16 cr. / Rs. 98.10 cr. (FY18). Its employees benefit expenses have come down drastically from Rs. 157.62 cr. (FY16) to Rs. 123.61 cr. (FY18). For last three fiscals, although it has posted CAGR of 32% in revenue from operations and 57% CAGR in adjusted PAT, TCNS has posted an average EPS of Rs. 7.23 and an average RoNW of – (1.08%). Issue is priced at a P/BV of 9.17 on the basis of its NAV of Rs. 76.54 as on 31.03.18. If we take latest earnings and attribute it on current paid up equity, then asking price is at a P/E of around 44 plus against industry composite of 68. As per offer documents, it has shown Page Ind., Aditya Birla Fashion, Future Lifestyle and Kewal Kiran as its listed peers that are currently trading at a P/E of around 92, 91, 61 and 23 (as on 11.07.18). However, they are not strictly comparable on an apple to apple basis.

On BRLM's front, two merchant bankers associated with this offer have handled 29 issues in the past three financial years, out of which 10 issues closed below the issue price on listing date.


Conclusion / Investment Strategy

As the segment is shifting from unorganized to organized play with GST, this company is having bright prospects ahead. Being first mover in the segment, it may catch fancy going forward. As issue appears fully priced, Investors may consider investment for long term rewards.

Reviewer recommends Subscribing to the issue for Long Term.

Review By Dilip Davda on Jul 11, 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. 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

TCNS Clothing IPO FAQs

  1. 1. Why TCNS Clothing IPO?

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

  2. 2. How is TCNS Clothing IPO?

    Read the TCNS Clothing IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. TCNS Clothing IPO what should investors do?

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

  4. 4. Is TCNS Clothing IPO good?

    Our recommendation for TCNS Clothing IPO is to subscribe for long term.

  5. 5. Is TCNS Clothing IPO worth Investing?

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

  6. 6. When will TCNS Clothing IPO allotment status?

    The TCNS Clothing IPO allotment status will be available on or around Jul 25, 2018. The allotted shares will be credited in demat account by Jul 27, 2018. Visit TCNS Clothing IPO allotment status to check.

  7. 7. When will TCNS Clothing IPO list?

    The TCNS Clothing IPO will list on Monday, July 30, 2018, at BSE, NSE.
More TCNS Clothing IPO Views / Analysis / Recommendations ...








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