Started in 1997, TCNS Clothing Co. Limited is New Delhi based India’s leading women's branded apparel company in terms of total number of exclusive brand outlets as of May 2018, according to Technopak. Company designs, manufactures, markets and retails a wide portfolio of women's branded apparel across multiple brands. They sell their products across India and through multiple distribution channels. As of March 31, 2018, they sold their products through 465 exclusive brand outlets, 1469 large format store outlets and 1522 multi-brand outlets, located in 31 states and union territories in India. As of March 31, 2018, they also sold their products through six exclusive brand outlets in Nepal, Mauritius and SriLanka. In addition, they sold their products through their own website and online retailers. Company's product portfolio includes top-wear, bottom-wear, drapes, combination-sets and accessories that caters to a wide variety of the wardrobe requirements of the Indian woman, including every-day wear, casual wear, workwear and occasion wear. Company has developed following three brands:1. W is a premium fusion wear brand, which merges Indian and western sensibilities with an emphasis on distinctive design and styling. This brand is targeted primarily at the modern Indian woman's work and casual wear requirements. As of March 31, 2018, W had 281 exclusive brand outlets and 717 large format store outlets located across 157 cities in India and five outlets outside India. Revenue from sales of products under brand W grew at a CAGR of 23.43% during Fiscals 2016 to 2018 and accounted for Rs 4,856.30 million, or 57.65% of our revenue from operations for the Fiscal 2018.2. Aurelia is a contemporary ethnic wear brand targeted at women looking for great design, fit and quality for their casual and work wear requirements. As of March 31, 2018, Aurelia had 183 exclusive brand outlets and 752 large format store outlets located across 184 cities in India and one outlet outside India. Revenue from sales of products under brand Aurelia grew at a CAGR of 47.80% during Fiscals 2016 to 2018 and accounted for Rs 2,837.13 million, or 33.68% of our revenue from operations, for the Fiscal 2018. 3. Wishful is a premium occasion wear brand, with elegant designs catering to women’s apparel requirements for evening wear and occasions such as weddings, events and festivals. They have been leveraging their W store network for selling Wishful products, however, they recently launched their first exclusive brand outlet for Wishful, in September 2017. Revenue from sales of products under brand Wishful grew at a CAGR of 39.73% during Fiscals 2016 to 2018 and accounted for Rs 730.82 million, or 8.68% of our revenue from operations, for the Fiscal 2018. Over the twelve month period ended March 31, 2018, Company sourced raw materials, such as printed fabrics, unprocessed fabrics and trim materials from approximately 181 suppliers, located across India. As of March 31, 2018, company had 3086 employees and in addition to their full-time employees, they utilise 301 personnel who are engaged on a contractual basis, with 214 personnel engaged at their warehouses and 47 personnel assisting in sampling of raw materials and finished products. As per financial performance, TCNS has posted total income/net profits of Rs. 129.13 cr. / Rs. 4.76 cr. (FY13), Rs. 170.27 cr. / Rs. 8.75 cr. (FY14), Rs. 301.93 cr. / Rs. 26.28 cr. (FY15), Rs. 488.13 cr. / Rs. - (41.61) cr. (FY16), Rs. 712.97 cr. / Rs. 15.65 cr. (FY17) and Rs. 849.16 cr. / Rs. 97.77 cr. (FY18). So company has posted consistent growth over last couple of years except a setback in bottom line in FY16. Company has posted an average EPS of Rs. 7.23 and average RoNW of - (1.08)% for last three fiscals. Issue is priced at a P/BV of 9.35 as per NAV of 76.54 on 31.03.18. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 46.48. As per RHP, industry average P/E ratio is 67.89 and listed peers comparison shown in above table. So issue looks fairly priced when compared with peers, but peers are very big in size. On BRLM's front, two merchant bankers associated with this issue. Kotak Mahindra Capital Company Limited has handled 23 public issues in the past three years. For recent 10 IPOs, 4 issues opened below offer price, one at par and remaining above issue price. Citigroup Global Markets India Private Limited has handled 13 public issues in the past three years. For recent 10 IPOs, 3 issues opened below offer price, one at par and remaining above issue price. As per financials, company's growth is consistent and very good except FY16, where company has posted losses, RoNW is - (1.08)% for last three fiscals and issue is priced at P/E of around 46.48 as per latest earnings. Company is in the business of branded women apparel and has very good scope for growth with same rate as done in past. This is an OFS, so money will goto selling shareholders and not for growth of company. So we give NEUTRAL rating to this IPO.
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