Started in 2004, Irish Clothing Limited is Kolkata - West Bengal based company engaged in the Manufacturing, Designing, Branding and Selling of Kids Wear under the brand name DoReMe© in India. DoReMe© caters to the Kids Wear category mostly juniors including various kinds of apparels and related products for all Infants, Boys and Girls. Company makes different kinds of products like Tops, T-shirts, Pants, Shorts, Frock, Dresses, and Towels among others catering to Kids Wear category. As on date Company has an active distribution network of 60+ distributors across cities / states with reach to more than 4,000+ retailers. The brand DoReMe© has good presence in 23 states across India with Maharashtra, Gujarat and NCR being the key markets. In Maharashtra; Mumbai, Pune and Nagpur are the cities with good presence of the products. Similarly in Gujarat, the products are predominantly available in cities like Ahmedabad, Rajkot, Baroda and Surat. They are currently in the process of expanding the reach further in few markets of Rajasthan and Southern Indian. Company sells its products mostly through distributor's network and around 10% of sales directly through online e-commerce channels like FirstCry, Hopscotch. Company deals mostly with all kinds of casual wears for kids in cotton fabrics. Company purchases dyed fabric sheets, accessories, embellishments, extra trimming materials and processes them into finished garments. Currently, the company has more than 700 Stock Keeping Units (SKUs) and the range keeps expanding with newer product, designs, styles, and colour shades among other reasons. Company currently operates out of four key manufacturing site based out of Howrah in West Bengal. The entire process of garment manufacturing is completed in-house including design development, cutting, printing, stitching, finishing, quality control and packaging. Currently installed capacity is of 30,000 pieces per day. Company has more than 600 employees as on date of RHP. As per financial performance, Company has posted total income/net profits of Rs. 24.99 cr. / Rs. 0.68 cr. (FY14), Rs. 30.09 cr. / Rs. 0.24 cr. (FY15), Rs. 36.99 cr. / Rs. 0.65 cr. (FY16), Rs. 46.89 cr. / Rs. 1.60 cr. (FY17) and Rs. 53.10 cr. / Rs. 3.38 cr. (FY18). For Q1 of FY19, company has posted net profit of 1.17 Cr on total revenue of 14.84 Cr. So company has shown consistent growth and margins are keep improving YoY. Trade receivables are around 20% of FY18 revenue from operations. In FY18, company has paid around 1.56 Cr as renumeration to its Managing / Whole Time Directors and for FY19, it has been set around 2.5 Cr, which looks very much for SME. For last three fiscals it has posted an average EPS of Rs. 6.23 and an average RoNW of 22.33%. Issue is priced at a P/BV of 1.70 on the basis of NAV of Rs. 53 post issue. If we annualise FY19 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 9 and industry average is around 40 as per RHP. So issue looks reasonably priced with respect to current earnings. On BRLM's front, for VC Corporate Advisors Private Limited this is the 1st IPO in last 3 years. Company has shown consistent growth over the years, RoNW is 22.33% for last three fiscals and issue looks reasonably priced with respect to current earnings. Company has not given details related to capacity utilisation, so for future growth if expansion is required or not, it's not known. Company has improved margins over the years, but its very competitive segment and there are many organised and unorganised players, making this industry highly competitive, but its also fast growing industry. But renumeration for directors looks very high. So we give NEUTRAL rating to this SME IPO.
✍️ Post a Comment