Credo Brands Marketing Limited have products are classified into three broad categories, being top wear, bottom wear and outerwear across a range of price points. As part of the brand re-creation, they have developed a new merchandise architecture for increasing the share of the consumer’s wallet by providing designs suited for specific occasions in the customer’s life ranging from relaxed holiday casuals, authentic daily casuals to urban casuals, party wear and also athleisure. They target the shopper who wants something more stylish than other mainstream brands. They are a design and retail focused company and accordingly, they outsource the manufacturing operations, which helps in keeping the fixed costs low. As of September 30, 2023, they were working with 48 manufacturing partners for manufacturing the products. As per the Technopak Report, the share of organized market for men’s apparel is expected to increase from ~ 45% in Fiscal 2022 to reach ~60% by Fiscal 2027. Further, men’s western wear market contributes to nearly 94% of the total Indian men’s apparel market and rest ~6% of the market is contributed by Indian men’s ethnic wear. As per the Technopak Report, India’s predisposition towards casual wear has grown exponentially over the last few years. Some of the factors that has accelerated the rise of casualization of men’s wear are increasing urbanization, social media connectivity, growth and influence of mobile internet and increased buying propensity amongst consumers and the concept of Friday dressing (casual Fridays) in the corporate world. Also, for time pressed consumers today, casual western wear is easy to maintain and wear, and thus becomes a more preferred lifestyle choice. As a result, the categories such as denim, activewear, casual shirts, athleisure, and loungewear are growing at a CAGR greater than 20% . Further, as per Technopak report, the casual led men’s western wear are likely to outpace the growth of formal led men’s western wear growing at an expected CAGR of22% vis-à-vis 18% for the latter from FY 22 to FY 27. In order to keep pace with these evolving fashion trends, the product mix has evolved significantly over the past several years from consisting of only shirts, t-shirts and trousers in the year 1998 to a wide range of products including sweatshirts, jeans, cargos, chinos, jackets, blazers and sweaters in relaxed holiday casuals, authentic daily casuals to urban casuals, party wear and also athleisure categories as on date. The design team is constantly focusing on expanding the product range to meet a varied range of consumer needs. They have organically grown the operations and have demonstrated an increase in the revenues and profitability, other than in Fiscal 2021 when the operations were impacted on account of COVID-19. The revenue from operations grew by 46.02% from Rs 3,411.72 million in Fiscal 2022 to Rs 4,981.82 million in Fiscal 2023. The revenue from operations for three months period ended June 30, 2023 was Rs 1,184.90 million. As per financial performance, Credo Brands Marketing Limited has posted total income / net profits of Rs 261.15 Cr / Rs 3.44 Cr (FY21), Rs 354.83 Cr / Rs 35.74 Cr (FY22), Rs 509.32 Cr / Rs 77.51 Cr (FY23) and Rs 119.43 Cr / Rs 8.57 Cr (upto Q1 FY24). So as per previous financials data, company has shown good growth, but if we check financial data of earlier years then company has just crossed pre-covid sales in FY23. Company has an average EPS of Rs 7.97 and average RoNW of 29.98% for last three fiscals. Issue is priced at a P/BV of 6.21 as per NAV of 45.08 as on 30.06.23. If we attribute latest earnings of FY22, FY23, and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 50.38, 23.23 and 52.49 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, three lead managers are associated with this IPO, and have handled around 65 IPOs in last three fiscals. DAM Capital Advisors Limited : This is 18th IPO from this BRLM. From last 10 IPOs, three are opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, two are trading below issue price and remaining are trading above issue price or at par. ( As on 14.12.23 ) ICICI Securities Limited : This is 49th IPO from this BRLM. From last 10 IPOs, one opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, one is trading below issue price and remaining are trading above issue price or at par. ( As on 14.12.23 ) Keynote Financial Services Limited : This is first IPO from this BRLM. ( As on 14.12.23 ) As per financials, Credo Brands Marketing Limited has shown good growth, RoNW is 29.98% and P/E is respectively 50.38, 23.23 and 52.49 as per FY22, FY23, and annualised FY24 earnings. So, issue looks aggressively priced. Company is in business of menswear readymade clothing, which is highly fragmented and competitive segment. Performance of BRLM is good. Also poor, Q1 FY24 results and complete OFS, so one may skip it in long available IPO queue. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
✍️ Post a Comment