This post on TCNS Clothing IPO tries to bring out consolidated brokerage views , Grey Market Premium, Subscription information. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to TCNS Clothing IPO or not.
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TCNS Clothing IPO: Grey Market Premium etc.
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TCNS Clothing allotted 4.7 million equity shares to 18 anchor investors at Rs 716 per scrip. According to a regulatory filing, it raised Rs 337.54 crore. The anchor investors include Auburn Ltd, Goldman Sachs India Ltd, DB International Asia Ltd, ICICI Prudential Life Insurance Company Ltd, and UBS Principal Capital Asia Ltd. etc.
Click here for Complete TCNS Clothing Anchor Investors List
Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on TCNS Clothing IPO.
Angel Broking: “The company has posted excellent CAGR of 49%/83% in revenue/ PAT over FY2014-18 (although on a low base), driven by increase in its product offerings and retail stores. Gross margin have been excellent at 55-60% over the same period. However, its employees cost has been high over FY2016-17 owing to the ESOPs expense which dented earnings in those years. At the upper end of the price band, the PE multiple works out be 44x FY2018 earnings (an exceptionally profitable year), which appears on the higher side when compared to large established listed retail players like Arvind (available at 34x FY2018 PE). Hence, for its limited financial history, singular focus on ethnic woman apparel and demanding valuations, we recommend ‘Neutral’ on the issue.”
Asit C Mehta : “TCNS Clothing Co. Limited is one of the leading players in the Indian women apparels market. Its brands W, Aurelia, and Wishful have a strong presence across segments. TCNS’ splendid revenue growth and pervasive presence place it well to benefit from the flourishing Indian women apparels market, outperforming the industry growth of 10% CAGR. At the upper price band of Rs.716, the asking price is at a P/E of 44X at FY18 EPS of Rs. 16.12 making it fairly priced. We recommend to SUBSCRIBE the issue from a long-term perspective.“
Capital Market: ” Score 35/100, The company’s financial track record till FY 17 is volatile and lack-lustre. Profits have posted massive jump in FY 18, just ahead of current offer for sale. Promoters are reducing their stake through current offer for sale even though there is no regulatory requirement. Post-offer promoter group stake will be only 32.4%.”
Choice Broking:“In the RHP, Page Industries Ltd. is considered as a peer for the company. Based on the product profile and the business model, we are of the opinion that Page Industries Ltd. cannot be considered as the peer to TCNS. We feel that, it has been included just to jack-up the peer average. On valuation front, at higher price band, the company is demanding a P/E valuation of 44.8x (to its restated FY18 EPS of Rs. 16) as against the peer average of 38.8x. With respect to FY18E and FY19E EPS too, it is asking a premium valuation to its peers. Thus, considering its short financial history and premium valuation, we assigning an “AVOID” rating to the issue.”
Centrum Wealth Research: “At the higher end of the price band of Rs.716, the issue is priced at P/E of 44.8x (post dilution) on FY18 basis, (vs. average industry composite of closely comparable listed peers at 51.9x). At this valuation, the issue seems fully priced. TCNS is positioning its brands to carve a niche for itself in terms of comfort, fit and concepts of products. The company is looking at capitalizing on the opportunity in the Indian women’s apparel industry and capture market share by strengthening its brand portfolio. Given the mature valuations and growth prospects, investors can subscribe to the issue from a long term perspective.“
Prabhudas Liladhar : “TCNS is looking at ~75 new EBO additions/year which would enable 17% sales CAGR, 20% EBIDTA CAGR and 18.5% PAT CAGR (excluding ESOP provisions) over FY18-21. The stock is being offered at 33.7xFY18 EPS (Before ESOP Provisions) which offers scope for decent gains over the medium term given strong growth outlook. Recommend Subscribe.”
SP Tulsiyan website: “While the company size is still small, high growth rates and huge market opportunity make the valuation reasonable. Professional management and marquee investor pedigree are added positives. Hence, we assign a ‘subscribe’ to the IPO.“
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.