Lagnam Spintex Limited

Started in 2010, Rajasthan based Lagnam Spintex Limited is a company engaged in the business of manufacturing of high-quality yarn (Ne 4 to Ne 20). The yarn is used in Denim, Terry Towels, Bottom Wears, Home Textiles and Industrial Fabrics etc. The manufacturing facility of the Company is situated at Bhilwara District in Rajasthan State. Spread over 10,000 square meters, the facility has the capacity to produce 16.5 tonnes of high-quality yarn per day. Currently company is operating above 99% capacity utilisation and with IPO funding, its planning to setting up additional manufacturing facility which supposed to start commercial production from September 2019. This would double the production capacity and also increase product variety to end use purposes. Lagnam Spintex is currently exporting its products to countries like Germany, Belgium, Portugal, Italy, Columbia, South Africa, Slovenia, China, Pakistan, Bangladesh, and others. Exports account for 18.90% of the manufacturing sales of the company. In the past five years, the company's revenues have increased from INR 4,983.41 lakhs in 2014-15 to INR 8,454.47 lakhs in 2017-18 at a CAGR of around 19%. The Net Profit after tax has grown at a CAGR of almost 43% in the last three years. The company has 79 permanent employees on its payroll. As per the financial performance, LSL has posted turnover/net profits of Rs. 42.06 cr. / Rs. 1.45 cr. (FY15), Rs. 49.83 cr. / Rs. 1.58 cr. (FY15), Rs. 56.56 cr. / Rs. 2.09 cr. (FY16), Rs. 75.38 cr. / Rs. 3.67 cr. (FY17) and Rs. 84.54 cr. / Rs. 4.68 cr. (FY18). Thus it has posted gradual growth in top and bottom lines. Company has doubled its top-line and bottom line increased to three times. Issue is priced at a P/BV of 1.75 on the basis of its NAV of Rs. 23.42 as on 31.03.18 and at a P/BV of 1.50 based on post issue NAV of Rs. 27.42. For last three fiscals, it has posted an average EPS of Rs. 3.48 and an average RoNW of 16.79%. If we take into account latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 15 against industry composite of 20. This issue appears fully priced. On BRLM's front, for Holani Consultants Private Limited this is the 2nd IPO and last IPO opened above issue price with 49% premium and currently trading above issue price. For BOI Merchant Bankers Limited this is first IPO. ( As on 24.08.18 ) As per financials, company's performance is very consistent, RoNw is 16.79% for last three fiscal and issue is fully priced as per latest earnings. Company is currently running at more than 99% capacity utilisation and with capacity expansion in the mid to end of FY19, it will show good growth at top line and bottom line. BRLM is new and this is the second IPO from it. So we give NEUTRAL rating to this SME IPO as per current market situation.

• 1 Mr. Dwarka Prasad Mangal
• 2 Mr. Anand Mangal
• 3 Lagnam Infotech Solutions Private Limited