Started in 2007, Flemingo Travel Retail Limited, is Mumbai based a global travel retailer with a leading position in the high growth Indian and Sri Lanka travel retail markets in terms of the number of locations where it operated core duty-free stores and the aggregate retail area of core duty-free stores it had as of September 30, 2017, and in terms of access to the number of passengers in Fiscal 2017, according to the Avalon Report. As of September 30, 2017, FTRL had operations in 119 locations in 26 countries spread across the Indian Subcontinent (India, Sri Lanka and Maldives operations), the US/Caribbean, Europe, the Mediterranean and Australia (cruise line travel retail operations), Europe (Baltona, Chacalli and Turkey operations) and the Rest of the World (Middle East, Africa and St. Marteen operations). Company started travel retail operations in India in 2003 and has expanded its operations successively into other emerging markets and, to diversify revenue streams, into duty-free sales on cruise ships. Company derives its revenues from multiple sales channels, including airports, cruise lines, in-flight sales and other channels (including stores at seaport, border-crossing and downtown diplomatic/military duty-free locations). As of September 30, 2017, company operated 308 stores with an aggregate retail area of 39,625 square meters, including 99 stores located in 39 airports, 186 stores on-board 60 cruise ships, 23 stores at seaport, border-crossing and down town diplomatic/military duty-free locations, and in-flight duty-free retail operations for seven airlines. In addition, they have recently forayed into a new sales channel, duty-free retail on ferries, which commenced operation out of ?winouj?cie, Poland in November 2017. FTRL's operations consist of different store formats, including: (i) core duty-free/duty-paid stores, (ii) duty-free/duty paid speciality stores focusing on fashion, souvenirs, technology, watches and jewellery, (iii) duty-paid F&B outlets, (iv) diplomatic/military duty-free/duty-paid stores specially operated for retail sales to diplomats and envoys, and (v) duty-free/duty-paid convenience stores. Company sells a large range of products in the following main product categories: liquor, tobacco products, watches and jewellery, cosmetics and toiletries, food and candies, apparel and accessories and other products. As of September 30, 2017, FTRL had 2,616 full-time employees and 628 temporary retail staff on-board cruise ships who represented around 50 nationalities, providing them with strong local knowledge at their retail locations and in the day-to-day operations. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
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