Started in 2007, Brand Concepts Limited is Mumbai, India based company engaged in developing brands and products. Brand Concepts is a Multi-Brand Retail company for licensed fashion and lifestyle brands in category – Travel Gears, such as Luggage Trolleys, Backpacks, Small Leather Goods like Belts & Wallets for Men & Women, Women Handbags and Lifestyle accessories. Company represent (as licensed brands) a wide mix of International and domestic brands, including but not limited to Tommy Hilfiger, HEAD, AND and Global Desi. Brand Concepts have exclusive franchise of Tommy Hilfiger and Trademark licenses of HEAD, AND and Global Desi. Brand Concepts also have in-house brands Sugarush and The Vertical. Company does retail sale of its products through its owned/ franchisee exclusive brand outlets (EBOs) and multi brand outlets (MBOs) across the country. Company has 12 EBOs and 10 MBOs, which are present in over 16 cities across the country. Company’s products are also sold at Large departmental stores and on e-commerce website apart from though dealer distribution network. On performance front, having suffered losses in FY13 and 14, BCL has posted turnover/net profits of Rs. 38.75 cr. / Rs.1.32 cr. (FY15), Rs. 50.66 cr. / Rs. 0.91 cr. (FY16) and Rs. 62.46 cr. / Rs. 1.44 cr. (FY17). For the first quarter of the current fiscal, it has reported loss of Rs. – (0.92) cr. on a turnover of Rs. 10.88 crore. For last three fiscals, it has posted an average EPS of Rs. 1.77 and an average RoNW of 40.50% on an equity base of Rs. 7 crore (Equity). In fact, it has a capital of Rs. 14 crore as on 30.06.17 that included Rs. 7 crore equity shares and Rs. 7 crore worth CCPs. BCL has carried forward losses of Rs. – (4.71) crore on the same date translating into negative net worth. Although it has shown VIP and Safari as its peer and P/E ratios on the basis of performance as on 31.3.17 is well comparable, on performance front, it is legging much behind. If we consider FY17 earnings and calculate P/E on full diluted equity after issue, then its around 33, which is above its peers like Safari. It has shown inconsistency in bottom lines for last three fiscals. So issue is very aggressively priced. On merchant banker's front, this is the 37th mandate from its stable so far (28th in last three fiscals). Out of last 11 listings, 2 opened below the offer price, 1 at par and the rest at a premium ranging from 4% to 131% on the offer price on the day of listings. 131% gain was for the maiden main board IPO of Salasar Techno. As per financials, company's growth is good in top line, RoNW is 40.50% for last three fiscals and issue looks aggressively priced as per latest earnings. Growth of the company is good and recent reforms like GST will be very beneficial to this company, but almost static or negative bottom line is not good for investors. So, we give AVOID rating to this SME IPO.
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