Lorenzini Apparels Limited

Started in 2007, Lorenzini Apparels Limited is engaged into the business of manufacturing, designing and marketing of readymade garments. Lorenzini Apparels offers diverse range of formal, semi-formal and casual wear for men and casual wear for women under the brand name 'Monteil & Munero', 'Monteil' and 'Calgari'. Company has its own manufacturing setup at Delhi. The manufacturing process includes cutting, stitching, sewing, finishing, inspection and packing. Company also outsources some of the manufacturing. Lorenzini Apparels sells its products through retail shops and online. Company sells its products through 18 exclusive stores/oulets located in Delhi, Haryana and Uttar Pradesh. Lorenzini Apparels also have supply agreement with some of the e-commerce platform including Myntra, Limeroad, Flipkart, Jabong, Amazon, paytm etc. Company also have franchise model to sell products. Company has 62 employees including 2 management personnel, 10 Skilled, 40 semi skilled and 12 unskilled employees.. On financial performance front, LAL has posted turnover/net profits of Rs. 13.16 cr. / Rs. - (0.05) cr. (FY13), Rs. 11.60 cr. / Rs. 0.12 cr. (FY14), Rs. 14.16 cr. / Rs. 0.06 cr. (FY15), Rs. 12.11 cr. / Rs. - (0.03) cr. (FY16) and Rs. 16.45 cr. / Rs. 0.15 cr. (FY17). Thus it has marked inconsistency in its performances. For first four months of the current fiscal ended on 31.07.17, it has earned net profit of Rs. 0.28 crore on a turnover of Rs. 6.63 crore. Thus sudden jump in top and bottom lines in last sixteen months is a bit surprising. Company has given details only for first four months of the current fiscal instead of first half. Issue at par is at a P/BV below 1. For last three fiscals it has posted an average EPS of Rs. 0.79 and an average RoNW of 2.04%. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 12 plus against its peers Cantabil, Monte Carlo and Mandhana are trading at a P/Es ranging from 16 to 25. So issue looks reasonably priced. On merchant banker's front, this is the 2nd mandate from its stable in last three fiscals and the only listing took place so far that of Shree Ganesh Remedies opened at offer price and closed at a discount of 18% on listing date. As per financials, top line and bottom line has shown zigzag effect, RoNW is 2.04% for last three fiscals and issue is reasonably priced as per latest earnings. As this sector is considered as jobs generating, so in upcoming budget sops are expected. So we give NEUTRAL rating to this SME IPO.

• 1 Mr Sandeep Jain
• 2 Ms Deepika Jain