TCNS Clothing IPO Review

TCNS Clothing IPO

TCNS Clothing IPO comprises an offer for sale (OFS) of up to 1.57 crore equity shares of Rs.2 each by PE investors promoters, and others. TCNS Clothing IPO represents  25.63% of the post issue paid-up share capital and total issue size is Rs. 1,125 crore at the upper end of the price band. The Women’s apparel maker which enjoy support of US based PE investor TA Associates operates brands like W, Aurelia and Wishful targeted at women.

Issue Period Wed, July 18 – Fri, July 20, 2018
Issue Details  1,57,14,038 Shares (Offer for Sale)
Issue Size (Rs. Cr)  1,125 Cr
Price Band Rs.714 – 716
Bid Lot 20 Equity Shares 
Issue Structure :  
QIB 50% of the Net offer
NIB 15% of the Net offer 
Retail 35% of the Net offer (  54,99,914 – Shares– 393.79 Cr)
BRLMs Kotak Mahindra Capital, Citigroup Global
Registrar Karvy Computershare Pvt. Ltd
About TCNS Clothing Co Ltd
  • TCNS Clothing Co. is a New Delhi based  branded apparel maker for ethnic women wear, operating  under 3 brands – W, Aurelia and Wishful.
  • The company has  the above  3 brands as follows:
     W –  a premium fusion wear brand,  merges Indian and western sensibilities and is targeted at modern Indian women’s casual and work wear requirements.
     Aurelia – a contemporary ethnic wear brand targeted at women looking for great design, fit and quality for their casual and work wear requirements.
     Wishful –  a premium occasion wear brand, with elegant designs catering to women’s apparel requirements for evening wear and for weddings, events, special occasions and festivals.
  • TCNS Clothing Co Ltd sells its products through exclusive brand outlets, large format stores, multi-brand outlets and online channels such as online retailers and its websites.
  • As of March 31, 2018, its products under W and Aurelia sold through 281 and 183 exclusive brand outlets, respectively. Further, as of March 31, 2018, the co. retailed its products through 1,469 large format store outlets across 203 cities in India and through 1,522 multi-brand outlets (including through distributors) across India.
  • TCNS Clothing Co Ltd also sellsd products through six exclusive brand outlets in Nepal, Mauritius and Sri Lanka.
  • Post issue Promoter holding presently at  43.68% will stand 32.42% and shareholding of US based PE investor TA Associates will come down  to 29%, from current 40.6%
TCNS Clothing: Financials:
 (Rs. In Cr)
Particulars Fy18 FY17 FY16 Fy15
Revenue from Operations 842.42 711.03 486.07 300.96
Revenue Growth (%) 18.48% 46.28% 61.51%
EBITDA  183.72 151.88 88.02
EBITDA Margin (%) 21.81% 21.36% 18.11%
Profit Before Tax 144.83 62.36 -13.64 40.96
Profit after Tax 98.1 15.8 -41.5 26.28
Profit as % to Revenue 11.65% 2.22% -8.54% 8.73%
EPS (Rs.) 16.12 2.67 -8.09
RONW(%) 22.74% 5.60% -85.87%
Net Asset Value (Rs.) 76.54 50.69 10.54
Equity Share Capital 11.27 11.12 9.17
Reserves 395.97 270.8 39.15
Net worth 431.47 281.93 48.32
Face Value 2
Post Issue Equity 12.26
EPS (FY18) 16.00
IPO Price 716
PE  44.74
CAGR Sales 3 Yrs 40.93%
CAGR Net Profit 3 Yrs 55.12%
Market Cap 4389.08
Market cap / Sales 5.21
TCNS Clothing IPO: Pros
  • TCNS Clothing Co Ltd (“TCNS Clothing”) is India’s Leading Women’s Branded Apparel Company in terms of total number of Exclusive Brand Outlets (“EBOs”) as of May 2018, according to Technopak.
  • The company designs, manufacture, market and retail a wide portfolio of women’s branded apparel across multiple brands. The company sells their products across India and through multiple distribution channels.
  • Company’s product portfolio includes top-wear, bottom-wear, drapes, combination-sets and accessories that caters to a wide variety of the wardrobe requirements of the Indian woman, including every-day wear, casual wear, work wear and occasion wear.
  • TCNS  brands “W”, Aurelia and Wishful which are 57.7%, 33.7% and 8.7% of its sales have grown at CAGR of 23.43%, 47.8% and 39.7% respectively during FY16-18. 
  • TCNS Clothing Co Ltd is a debt free company and having asset light business model. 
  • TCNS Clothing Co Ltd intends to open approximately 75 to 85 exclusive brand outlets during Fiscal 2019 and 2020.
TCNS Clothing IPO: Risks
  • May be unable to anticipate and respond to changes in fashion trends and changing customer preferences in a timely and effective manner
  • TCNS Clothing i dependent on third party manufacturers and has no manufacturing capacity of its own. 
TCNS Clothing IPO: Comparison with Peers: 
Rs. In Crore 
 Company TCNS Clothing Arvind Page Kewal Kiran
Sales 842 10801 2,551.37 460.28
Net Profit 98.1 315.81 346.98 73.3
EPS 16.00 12.21 311.19 59.45
CMP 716 412.5 28702 1,371
BITDA Margin % 21.81% 8.46 21.19 21.32
P/E 44.74 33.78 92.23 23.06
Market Cap in cr  4,390 10,667 32,002 1,691
Market Cap/ sales 5.21 0.99 12.54 3.67
TCNS Clothing IPO : Assessment
  • TCNS Clothing Co Ltd size is small compared to peers like Page industries, kewal Kiran, Arvind  etc but has shown high growth rates. TCNS Clothing is early mover in ‘women ethic wear’ category and has established strong brands and has  industry above gross margins.
  • There is good  market opportunity in the segment in which company operates.
  • The company has posted excellent CAGR of in revenue/ PAT over FY2014-18. TCNS Clothing enjoys good gross margins at 55-60%.
  • There has been healthy increase in its product offerings and retail stores. 
  •  At post issue P/E of around 44, the TCNS Clothing IPO valuations are bit stretched while its growth remains impressive.  I intend to apply in the TCNS Clothing IPO only if there is good demand for QIB investors to the IPO. TCNS Clothing being a first mover, a good play on ethnic women wear segment and a brand play could attract institutional interest despite being priced high.
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. 

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