S P Apparels Ltd

Incorporated in 1989, S P Apparels is engaged in manufactures and sells knitted garments for infants and children in India. Company's product range includes body suits, sleep suits, tops, and bottoms. They also manufacture a broad range of menswear garments consisting of shirts, polo shirts, tshirts, trousers, jeans, sweaters, jackets and men's innerwear consisting of vests, briefs, boxer shorts and socks under the brand 'Crocodile' which is subsidiaries through an agreement with Crocodile International Pte Limited, Singapore. They mainly export their products to United Kingdom. During FY16, the company exported approximately 35.98 million pieces of knitted garments for infants and children directly to its international customers, including TESCO and Primark. SP Apparels operates 21 manufacturing facilities in and around the region of Avinashi in Tamil Nadu. Company has 4,874 sewing machines, eight cutting machines, 79 embroidery machines, 17 printing machines, 16,896 spindles and 22 dyeing machines. As per financial performance, Neogen Chemicals has posted total income/net profits of Rs. 80.31 cr. / Rs. 3.67 cr. (FY14), Rs. 92.48 cr./ Rs. 4.97 cr.(FY15),     Rs. 109.04 cr. / Rs. 5.14 cr. (FY16), Rs. 121.78 cr. / Rs. 7.21 cr. (FY17) and Rs. 164.68 cr. / Rs. 10.53 cr. (FY18) . For upto Q3 of FY19, it has reported net profit of Rs. 12.30 cr. on total revenue of Rs. 159.69 cr. So company has posted good and consistent growth year on year. Trade receivables for FY18 was Rs 41.36 Cr, which is around 25% of total sales. Neogen has posted an average EPS of Rs. 4.34 and average RoNW of 19.72% for last three fiscals. Issue is priced at a P/BV of 7.02 as per NAV of 30.62 on 31.12.18. If we annualise latest earnings and attribute it on post issue equity, then asking price is at a P/E of around 30.58 and as per FY18 earnings P/E is around 47.67. As per RHP, industry average is around 37.67 and comparison with listed peers is given in above tables. So issue looks fully price as per latest earnings.  On BRLM's front, for Batlivala & karani Securities India Private Limited and Inga Advisors Private Limited, this is first IPO. ( As on 22.01.19 ) As per financials, company's has shown good results, RoNW is 19.91% for last three fiscals and issue is priced at P/E of around 30.58 as per latest earnings. Company has made its place in the bromine and lithium based products. The issue is fully priced as per latest earnings. But company has expansion plan and expected to grow with healthy rate. So we give NEUTRAL rating to this IPO.

• 1 Mr. P Sundarajan
• 2  Mrs. S Latha