Le Merite Exports Limited

Le Merite Exports Limited is engaged in manufacturing and trading of textile products namely cotton yarn, greige fabric and finished fabric for domestic and export sales. They deal in diversified product portfolio with capability to supply compact cotton yarn varying from counts NE 16/1 to NE 32/1 & NE 16/2 to NE 32/2 combed carded & double yarn that are used in various forms and for varied end uses. They also export sustainable – ecofriendly organic yarn and fabric to international textile and garment manufacturers. The company has been recognized as 'Three Star Export House' by the Director General of Foreign Trade with a certificate valid from September 30, 2015 to September 29, 2020. Further the Company had made an application on September 29, 2021 for renewal of certificate. Company have incorporated two (2) subsidiary companies for diversification into non cotton yarn products: (1) Le Merite Filament Private Limited and (2) Le Merite Laxmi Spinning Private Limited.  The company exports its products to domestic and international markets, including 52 countries covering 5 continents. As per financial performance, Le Merite has posted total income/net profits of Rs 180.93 Cr / Rs 1.13 Cr (FY19), Rs 217.28 Cr / Rs 3.15 Cr (FY20), Rs 269.13 Cr / Rs 7.05 Cr (FY21) and Rs 370.87 Cr / Rs 15.87 Cr (9M FY22). So company has shown very good results. Company has posted an average EPS of Rs 27.90 and average RoNW of 21.89% for last three fiscals. Issue is priced at a P/B of 2 as per NAV of Rs 37.57 post issue. As per FY21 earnings on fully diluted equity post issue, asking price is at P/E of around 25 and as per annualised FY22 earnings P/E is 8. As per RHP, Comparison between listed peers are shown in above table.     On BRLM's front, Fedex Securities Private Limited associated with this SME IPO and handled 12 IPOs in last 4 years. From last 10 IPOs, 8 opened above issue price and remaining below issue price or at par. As of now from last 10 IPOs, six are trading above and remaining are trading above below price. ( As on 25.04.22 ) As per financials Le Merite Exports Limited, has shown good results, RoNW is 28.99% and P/E is respectively 25 and 8 as per FY21 and annualised FY22 earnings, which looks fully priced. Performance of BRLM is average post listing. So we are giving NEUTRAL rating to this IPO.

• 1 Abhishek Lath
• 2 Umashankar Lath