Iris Clothings NSE RI Review - (May apply)

•    The company is engaged in manufacturing, designing and branding children’s apparels under the popular brand name of DOREME.
•    The company marked steady growth in its financial performance. 
•    Though the RI is at a discount of around 20.90%, it appears to be fully priced. 
•    Well-informed investors may park funds for long term.

ABOUT COMPANY:
Iris Clothings Ltd. (ICL) is engaged in the business of manufacturing, design conceptualizing, branding, and distribution of children's apparel and accessories under the DOREME® brand across India as well as export markets. The DOREME® brand is positioned within the kids' wear category, covering a range of clothing and related products/accessories designed for infants, junior boys and girls, catering to their needs indoor and outdoor apparel needs. The company’s product portfolio includes a range of items across categories such as summer wear, winter wear, sportswear. The collection includes multiple designs of tops, t-shirts, pajamas, trousers, shorts, dresses, polyfil suits, sweatshirts, hoodies, joggers, dry-fit and accessories such as bags and bottles. 

The company’s products prices range between ₹200 to ₹2,000 making the products accessible for a wide range of end users. In November 2022, the company’s manufacturing plant located in Ulluberia was granted the Facility and Merchandise Authorization (FAMA) license to manufacture and distribute products merchandise featuring Disney’s intellectual property. The licensing agreement allows IRIS to design and sell kids apparel using Disney and Marvel movie characters. Capitalizing on this partnership, IRIS introduced a line of children’s clothing under the Disney x DOREME brand within the premium category.

The origins of its trace back to the establishment of Iris Clothings in 2004, which initially functioned as a contract manufacturing firm producing apparel for 3rd party brands. Within a short period, the company identified an opportunity to establish an independent brand in the children’s wear segment, leading to the launch of brand, “DOREME” within the first year of operations. It commenced sales activities under brand in 2005, through a distributor-retailer network based out of Mumbai. As ICL witnessed increase in consumer demand, it expanded the brand presence through new distributors and retailers, with an aim of steady growth within the Mumbai market. This foundation enabled a gradual expansion of distribution and manufacturing capabilities in additional markets across India. In 2012, through a formal sale agreement, Iris Clothings Proprietary Concern was fully acquired by the current corporate entity. This transaction involved the acquisition of Iris Clothings’ assets, liabilities, and all operational activities, thereby consolidating the brand's distribution and manufacturing under one corporate structure. As of January 31, 2025, it had 1389 employees on its payroll. It also hires contract workers as and when required.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 13595105 equity shares of Rs. 2 each at a fixed price of Rs. 35 per share to mobilize Rs. 47.58 cr. The RI opens for subscription on March 27, 2025, and will close on April 17, 2025. The company is offering RI in the ratio of 1 for 6 to its eligible stakeholders as of the record date of March 13, 2025. The company is asking for full money on application for number of shares applied. Post allotment, shares will be listed on NSE SME. The company is spending Rs. 4.80 cr. for its RI and from the net proceeds, it will utilize Rs. 35.14 cr. for working capital, and Rs. 7.64 cr. for general corporate purposes. 

The RI is solely lead managed by the company itself, and Cameo Corporate Services Ltd. is the registrar to the issue. 

Post RI, company’s current paid-up equity capital of Rs. 16.31 cr. will stand enhanced to Rs. 19.03 cr. Based on RI pricing, the company is looking for a market cap of Rs. 333.08 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted a total income/net profit of Rs. 113.11 cr. / Rs. 8.26 cr. (FY23), Rs. 122.02 cr. / Rs. 12.21 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it marked a net profit of Rs. 6.27 cr. on a total income of Rs. 72.86 cr. Thus, it has posted steady growth in its top and bottom lines for last two fiscals, but marked a minor setback in bottom lines for H1 ofFY25.the reported periods. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: IRISDOREME (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 49.89 on March 12, 2025, and opened on an ex-right basis at Rs. 47.10 on March 13, 2025. Since then, it has marked a high/low of Rs. 47.39 / Rs. 43.15. The scrip last closed at Rs. 44.25 as of March 24, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 84.71 / Rs. 42.01. The RI is priced at a discount of 20.90%.

The promoters’ holding has been constant at 70.94% for the last three quarters ended with December 31, 2024. The counter is well managed above the RI price to lure investors.