initiatingcoverage textile 25thmarch2019… · 2019. 3. 27. · jainamshareconsultantpvtltd...

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RadhikaModi - Assistant Research Analyst ([email protected]); 0261-6725518

TextileInitiating Coverage |

25th March 2019

Investors are advised to refer through important disclosures made at the last page of theResearch Report.Jainam Share Consultant research is available on www.jainam.in

http://www.motilaloswal.com/Institutional-Equities

Jainam Share Consultant Pvt Ltd Sector : Textile

25-03-2018 2

IndexA. Company Overview

1. About…………………………………………………………………………..32. Investment Rationale………………………………………………………….43. Risk……………………………………………………………………………..6

B. Industry Overview

1. Indian Apparel Industry……………………………………………………….72. Growth Drivers For Ethnic Apparel…………………………………...………9

C. Business of the Company

1. Distribution Network…………………………………………….…………..102. Product Profile……………………………………………………….….…...113. Brands……………………………………………………………………..….114. Process……………………………………………………………….……….135. Top Shareholders………………………………………………………….....146. Management……………………………………………………………...…..15

D. Financial Outlook

1. Profit & Loss………………………….……………………………….…….162. Cash Flow Statement………………………………………………………..163. Ratio……………………………………………………………………….…174. Balance Sheet…………………………………………………………..….…18

E. Analysis

1. Peer Analysis……………………………………………………………….…192. Valuation…………………………………………………………………..….20

F. Conclusion

1. Recommendation…………………………………………………………….222. Sources…………………………………………………………………….….233. Full Form & Glossary………………………………………………………....244. Report Gallery………………………………………………………………...255. Disclaimer…………………………………………………………………..…26


25-03-2018 3

Company Overview

About

Exchange: BSE BSE Code: 541700 Current Market Price: 793.55 Date: 25-Mar-19

Latest Date 25th Mar 2019Latest Price (Rs) 793.5552 Week High (Rs) 856.8052 Week Low (Rs) 515.00Face Value(Rs) 2.00Industry PE 20.84TTM PE 49.61

TTM Period 201803Price/BV(x) 8.41

EV/TTM EBIDTA(x) 29.86EV/TTM Sales(x) 5.77Dividend Yield% 0.00

MCap/TTM Sales(x) 5.80Market Cap (Rs in Cr. ) 4866.30

EV (Rs) 4841.71

Latest no. of shares (in Cr.) 6.13

Source : Trendlyne

TCNS Clothing Ltd.TCNS Clothing Ltd. which was incorporatedas a public limited company on January 5,2018, is India’s leading women’s brandedApparel Company in terms of total numberof exclusive brand outlets, according toTechnopak. They design, market and retaila wide portfolio of women’s brandedapparel across multiple brands. CurrentlyTCNS has three brands - W, Aurelia andWishful. It sells its product across India andthrough multiple distribution channels. Asof December 31, 2018, it sold its productsthrough 521 Exclusive brand outlets, 1573Large format store outlets and 1496Multi-brand outlets, located in 31 statesand Union territories in India. And also soldits products through six Exclusive brandoutlets in Nepal, Mauritius and Sri Lanka.They launch more than 1600 productsevery year and the product portfolioincludes top-wear, bottom-wear, drapes,combination-sets and accessories thatprovide a wide variety of the wardroberequirements to the Indian woman,including every day wear, casual wear,work wear and occasion wear.


25-03-2018 4

Investment Rationale

Strong Distribution Network : The company has pan-India and multi-distributionchannel retail presence. As of December 31, 2018, it sold its products through 521 Exclusivebrand outlets, 1573 Large format store outlets and 1496 Multi-brand outlets, located in 31states and Union territories in India. And also sold its products through six Exclusive brandoutlets in Nepal, Mauritius and Sri Lanka. Company also sell their products through onlineretailers, Myntra, Jabong and Amazon, among others and through their websites,wforwoman.com and shopforaurelia.com. The company’s widespread distribution andretail network and their relationships with large format stores, multi-brand outlets andonline retailers enable them effectively distribute and sell their products to their targetconsumers.

Innovative Designs and New Products : The company focuses on innovative designsand new products with optimized fittings, sizing and higher quality. For example, acrosstwo seasons in a twelve month period ending March 31, 2018, they launchedapproximately 1,600 products in various sizes across product categories. TCNS refresh theirproduct offerings at an average interval ranging from two to three weeks. Previously, theyhave also launched several iconic and different designs. And W has consistentlyinterchanged traditional and fusion-wear designs to introduce new fashion styles such asthe ‘Mughal gown’, ‘pant robes’ and ‘stiletto kurtas’.

Longstanding relationship with suppliers and job workers : The companymaintains long standing relationships with their suppliers and job workers. Out of their top10 suppliers as of March 31, 2018, they have not faced any attrition in the last three years.One of their competitive strengths lies in building and managing an extensive sourcingnetwork to support requirements of their product development teams. In a twelve monthperiod, they sourced raw materials such as printed fabrics, unprocessed fabrics and trimmaterials from approximately 181 suppliers located across India. For example, an ethnictop-wear garment generally requires eight different fabrics and trim materials. So itsnecessary to have good relationship with suppliers and job workers.

Asset-light Business Model : TCNS business model relies on the strength of their designprocess, distribution and retail network and their long standing relationships with vendors.They enter into leases or franchise agreements for exclusive brand outlets which requireslower upfront capital expenditure compared to acquisition of real estate or properties forsetting up outlets. Further, manufacturing products through agreements with job workersallows them to increase production capacity as required and without incurring additionalcapital expenditure. This business model allows them to be capital efficient.

Expansion : In FY18, FY17 and FY16 , company added 84, 76 and 70 new EBO (net ofclosures), respectively in new cities and cities where they have existing stores. Thecompany plans to annually open approximately 75 to 85 EBO in India during FY19 and 20. In


25-03-2018 5

addition to this, the company plans to open stores in other Asian countries such as SaudiArabia, Kuwait, the UAE, Bahrain and Oman. But TCNS also periodically closes EBO whichare not profit making or which they determine are not adhering to their internal standardsand business plans. For FY18, FY17 and FY16, the company closed 20, 15 and 18 EBO.

TCNS is also planning to strengthen their brands - It has appointed Disha Patani as BrandAmbassador for Aurelia.


25-03-2018 6

Risks

Cash Conversion Cycle: The cash conversion cycle of the company is 76 days for FY18 butas per the management they are trying to reduce the working capital days by 20-30 days andits effect should be seen in Q3FY19 or Q4FY19.

Changes in fashion trends and customer preferences : Being a women brandedapparel company, the business is characterized by fast changing fashion trends. Theindustry and the trend are rapidly changing and the company needs to adapt those changesby modifying their existing products or launch new products so that they don’t lose thecustomers.

Competition : The company has a major competition form the unorganized sector as itforms major part of this industry.

Dependence on job workers : TCNS is dependent on few job workers to get their workdone. For example : The top five job workers accounted for 52.79%, 53.08% and 49.84% oftheir fabrication charges for FY18, FY17 and FY16. In case of replacing these job workers,the company may face difficulties as it will be time consuming ( to train new job workers )and also there will be delay in production.

Dependence on channel : The top five large format stores by revenue accounted81.80% of revenues from large format stores, or 22.68% of revenues from operations, forFiscal 2018. Similarly, their top five online retailers by revenue accounted for 91.12% ofrevenues from online channels, or 9.16% of their revenues from operations, for Fiscal 2018.

Seasonal Business : The company is impacted by season variations in sales volumes. Itcan see an increase in the business before Diwali and during end of season sales

Too Much Dependence on Brand ‘W’ :

% of revenue Brand ‘W’Q3FY19 61%FY18 57.65%FY17 61.23%FY16 66.15%FY15 66.61%


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Industry Overview

Indian Apparel IndustryThe apparel market in India was around US$ 50.9 billion (30% Indian and 70% western) in Fiscal2017 and is expected to grow at a CAGR of 9% between Fiscal 2017 and Fiscal 2020 to reachUS$ 65.8 billion. This will be mainly because of factors such as greater purchasing power, in turndriving growth in primary discretionary spends, better access and availability of products, higherbrand consciousness, increasing urbanization and increasing digitization.The Apparel market can be broadly classified into three broad categories; men’s wear, women’swear and kid’s wear. Although, men’s wear segment contributes the most in apparel market; i.e41% followed by women’s wear at 38% and kids at 20%, the women’s wear segment is expectedto grow at higher rate than men’s wear.

-

The women’s apparel market in India as of Fiscal 2017 is at US$ 19.3 billion and expected to reachUS$ 42 billion by Fiscal 2025, growing at a rate of approximately 10%. The women’s apparelmarket in India is growing faster than the men’s largely due to an Increasing proportion ofwomen in the working population in India, a shift towards aspiration rather than need basedbuying, increase in disposable incomes etc.


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Break-up of Women’s apparel market

A combination of factors such as increasing disposable income, assurance of better design, qualityand fit, rising aspiration levels and growing acceptance of ethnic wear as work wear is leading to ashift from traditional apparel such as sarees to ethnic wear such as salwar kameez and kurtas aswell as a shift from unbranded to branded ethnic wear. The women’s ethnic apparel market inIndia was US$ 6.5 billion for the Fiscal 2017, i.e., 47% of the women’s Indian apparel market,and is projected to reach US$ 9.5 billion by Fiscal 2020, growing at a CAGR of approximately 14%.The branded ethnic market valued at US$ 1.5 bn for FY17, is estimated to grow at a CAGR of 30%till FY20.

Brand Year of Inception Number of EBOs Focus GeographyW 2002 306 Pan IndiaAurelia 2009 210 Pan IndiaWishful 2006 5 Pan India

BIBA 1988 254 North, South and WestGlobal Desi 2007 147 North & WestFabindia 1960 261 Pan IndiaSoch 2005 99 South


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Growth Drivers for Ethnic Apparel

Branding : Large format players have tapped into the need gap in Ethnic apparel byoffering their own private labels, which offers convenient shopping of value products atpopular price segments

Increasing independence: By 2021, the population for career women in India isexpected to reach 45 to 50 million. A rise in the working women population is expected toincrease affluence levels of families in urban cities, and thus an increase in spending is alsoexpected

Increasing ethno-centricity : Ethnic apparel has transitioned from being traditionalapparel to everyday apparel; brands have identified the transition and offer productspositioned across occasions

Women performing multiple roles which allows modern women the flexibility to mediatethe balance between work life and home life

Shift in usage and fashion trends has caused Ethnic apparel to become more acceptableamong younger generations. Brands are targeting younger generations positioning Ethnicapparel as affordable, comfortable and contemporary fashion

Fit conforming to Indian body types


25-03-2018 10

Business of the Company

Distribution Network

The company has pan-India and multi-distribution channel retail presence. It distributes itsproduct through Exclusive brand outlet (EBO), Multi Brand Outlet (MBO), Large format stores(LFS), International outlet.

Company also sell their products through online retailers, Myntra, Jabong and Amazon, amongothers and through their websites, wforwoman.com and shopforaurelia.com.

The multi-distribution channel retail strategy has enabled them to achieve growth acrossformats. During Fiscals 2014 to 2018, revenue from operations through sales at exclusive brandoutlet stores grew at a CAGR of 47.71%, large format stores grew at a CAGR of 48.61%,multi-brand outlets grew at a CAGR of 53.10% and online retailers grew at a CAGR of 56.45%.

FY15 FY16 FY17 FY18 Q3FY19Exclusive brand outlet 235 305 381 465 521Large format store outlet 565 794 991 1469 1573Multi Brand Outlet 748 960 1109 1522 1496International outlet 0 2 6 6 6Total Point of sales 1548 2061 2487 3462 3596Online Sales 13.17% 6.78% 10.00% 10.05% 12.00%


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Product ProfileProducts include women’s top-wear such as kurtas, tops and gilets; bottom-wear such as churidars,trousers, skirts, slim pants, palazzos and tights; drapes such as dupattas, stoles and scarfs;combination-sets of salwar, kameez and dupatta; and accessories such as jewellery.

Brands

W : It is a premium fusion wear brand, which merges Indian and western sensibilities with anemphasis on distinctive design and styling. This brand is targeted primarily at the modern Indianwoman’s work and casual wear requirements. It was the first and currently TCNS biggest brandwith 61% share in revenue.

W Dec-18 Sept 2018 FY18 30-Sep-17 FY17 FY16 FY15

Exclusive brand outlets 306 300 281 258 233 202 166

Large format store outlets - - 717 676 535 426 302

International Outlets 5 5 5 5 5 2 0

Aurelia : It is a contemporary ethnic wear brand targeted at women looking for a mix of greatdesign, fit and quality in their casual and work wear. The company has recently apoointed DishaPatni as the Brand Ambassador of Aurelia and it has 33% share in revenue as of December 2018.

Aurelia Dec-18 Sept 2018 FY18 30-Sep-17 FY17 FY16 FY15

Exclusive brand outlets 210 203 183 159 148 103 69

Large format store outlets - - 752 629 456 368 263

International Outlets 1 1 1 1 1 0 0

Wishful : It is a premium occasion wear brand, with elegant designs catering to women’s apparelrequirements for evening wear and occasions such as weddings, events and festivals.

Brand Product PortfolioW top-wear, bottom-wear, drapes

Aurelia top-wear, bottom-wear, drapes,combination-sets

Wishful top-wear, bottom-wear, drapes

Wishful Dec-18 Sept 2018 FY18 30-Sep-17 FY17 FY16 FY15

Exclusive brand outlets 5 2 1 1 - - -


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Launch Year Type Price Range

W 2002 Premium fusion: Mix of western andIndian 1299-1899

Aurelia 2009 Contemporary ethnic: Staple designbrand

799-1499 and combination sets :1999-4499

Wishful 2006 Occasion wear 2999-4999

Revenue from sale of products under brand W, Aurelia and Wishful grew at a CAGR of 23.43%,47.80% and 39.73% respectively during FY16-18.

Brand

Revenue from sale of goods ( in cr.) and as a % of Revenue fromOperations (net)

FY18 FY17 FY16 FY15

485.63,57.65%

439.96,61.23%

321.43,66.15%

196.67,66.61%

283.71,33.68%

218.09,30.35%

127.02,26.14%

76.46,25.89%

73.08,8.68%

60.46,8.41%

37.43,7.70%

22.15,7.50%


25-03-2018 13

Process

Sourcing of Raw Materials : The company requires raw material like printed fabrics,unprocessed fabrics and trim materials and for this, the company source raw materials fromapproximately 181 suppliers, located across India over a twelve month period. The companydoes not purchases fabrics from traders and intermediaries but prefer to purchase themdirectly from mills or weavers. TCNS does not enter into long term agreement with suppliersand instead issues purchase orders according to the requirement.

Manufacture of product : The company manufacture their products through agreementswith job workers out of which significant majority are located in Delhi. Over the twelve month,the company worked with 78 job workers for manufacturing their products. TCNS provide rawmaterials including their logos and instructions about specifications of the manufacturingservices to the job workers. The job workers utilize their own manufacturing facilities,personnel and equipment for manufacturing the products. The company also exercise controland regular supervision over the manufacturing of their products at the facilities of such jobworkers through their personnel, who are either stationed at such facilities or periodically visitthese facilities for inspections.

Designing : The design team comprises of skilled designers and craftsmen both for fabric printdesign as well as for clothes styling. Fabrics prints that are developed for their brands aredesigned in-house, enabling us to create exclusivity and uniqueness for their products. As ofMarch 31, 2018, their design team consisted of 37 employees, with 11 employees exclusivelydedicated to designs for Aurelia and 26 employees exclusively dedicated to designs for W andWishful. These 37 employees prepare approximately 3000 preliminary fabric print designs and1750 preliminary products in order to launch approx. 2700 fabric print designs for 1600products.


25-03-2018 14

Top Shareholders

Name of Share holders No of shares Percentage

Wagner Ltd. 24931803 40.66%

Vijay Kumar Thadani 750000 1.22%

Vijay Kumar Misra 2085545 3.40%

Saranpreet Pasricha 1140001 1.86%

Parmeet Pasricha 3203405 5.22%

Onkar Singh Pasricha 9517522 15.52%

Arvinder Singh Pasricha 12509789 20.40%

Angad Pasricha 416724 0.68%

Anant Kumar Daga 4861794 7.93%

Amit Chand 703910 1.15%


25-03-2018 15

Management

Name Designation About

Mr. Onkar SinghPasricha

Chairman/Executive Director

He holds a bachelor’s degree in technologyin electrical engineering from IndianInstitute of Technology, Delhi.

He has been on the Board since December3, 1997 and was last re-appointed onJanuary 5, 2018.

He has more than 40 years of experience inthe apparel industry.

Mr. Anant KumarDaga Managing Director

He holds a bachelor’s degree in commercefrom the University of Calcutta and apost-graduate diploma in management fromIndian Institute of Management,Ahmedabad.

He joined the company as a Chief ExecutiveOfficer with effect from March 16, 2010 andhas been on the Board since September 7,2016.

He has worked with Reebok, India asdirector (sales) and with ICICI bank.

Ms. Neeru Abrol IndependentDirector

She is an associate member of the Instituteof Chartered Accountants of India.

She has worked with National FertilizersLimited (“NFL”) as its chairperson andmanaging director

Prior to NFL, she has worked with the SteelAuthority of India Limited, holding variousmanagement positions.


25-03-2018 16

Financial OutlookProfit and Loss Statement

Cash Flow

Particulars FY14 FY15 FY16 FY17 FY18Income fromoperations 169.59 300.96 486.07 711.03 842.43

Growth (%) - 77.46% 61.50% 46.28% 18.48%Total Expenses 148.10 249.86 489.95 634.73 686.99Operating Profit 21.49 51.10 -3.88 76.3 155.44Operating ProfitMargin 12.67% 16.97% -0.79% 10.73% 18.45%

Other Income 0.68 0.97 2.06 1.94 6.73Other income as %of sales 0.40% 0.32% 0.42% 0.27% 0.79%

Depreciation 3.99 6.23 8.87 13.4 16.7Interest 4.90 4.89 2.95 2.47 0.67Profit Before Tax(PBT) 13.28 40.95 -13.64 62.36 144.83

PBT Margin 7.83% 13.60% -2.81% 6.54% 17.19%Tax 4.53 14.67 27.86 46.56 46.73Net Profit 8.75 26.28 -41.50 15.80 98.10Net Profit Margin 5.15% 8.73% -8.53% 2.22% 11.64%EPS 1.71 5.13 -8.09 2.67 16.12

Metric/Figures (cr) FY14 FY15 FY16 FY17 FY18Cash Flow fromOperating Activity 8.03 14.01 34.42 25.10 41.33

Cash Flow from InvestingActivity -8.44 -14.49 -27.91 -27.06 -27.62

Cash Flow fromFinancing Activity -1.45 0.71 -4.54 1.17 21.01

Net Cash Flow -1.86 0.23 1.97 -0.79 34.72


25-03-2018 17

Ratio Analysis

Performance Ratios 2014 2015 2016 2017 2018RoA % 5.87 13.69 -15.23 4.05 17.67RoE % 11.24 27.46 -52.69 14.00 41.50RoCE % 16.30 34.23 -9.03 34.36 40.28

Efficiency Ratios 2014 2015 2016 2017 2018Receivable Days 124.73 76.55 48.57 42.06 51.85Inventory Days 118.64 90.02 84.98 85.00 92.11Payable Days 61.96 55.15 52.51 61.74 67.47

Financial Stability Ratios 2014 2015 2016 2017 2018Total debt/equity (x) 0.41 0.36 0.79 0.05 0.08Current Ratio (x) 1.80 1.70 0.92 2.31 3.38Interest Ratio (x) 3.71 9.39 -3.63 26.27 216.84

Cash Flow Ratios 2014 2015 2016 2017 2018Cash flow per Share 0.88 1.53 3.75 2.26 7.33Sales to Cash flow 21.12 21.47 14.10 27.92 20.29

Valuation Ratios 2014 2015 2016 2017 2018EPS (x) 0.95 2.86 -4.52 1.42 17.40EV/EBITDA (x) 1.69 0.83 -20.40 0.09 -0.08

Du-Pont ratios 2014 2015 2016 2017 2018RoE (%) 11.24 27.46 -52.69 14.00 41.50PATM (%) 5.16 8.73 -8.54 2.22 11.64Sales/Total Assets (x) 1.14 1.57 1.78 1.82 1.52Assets to Equity (x) 1.92 2.01 3.46 3.45 2.35


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Balance Sheet

Particulars 2014 2015 2016 2017 2018AssetsNon-current assetsProperty, plant and equipment 11.76 20.30 37.93 45.82 50.57Capital work in progress - 0.09 0.22 0.84 2.49Intangible assets 0.61 0.76 1.36 3.52 6.92Non-current Investments 0.60 0.90 1.32 1.72 -Long-term loan and advances 14.94 23.35 20.12 34.74 39.31Other non current Assets 3.60 5.03 25.65 26.58 28.15Total non current assets 31.51 50.43 86.60 113.22 127.44Current AssetsInventories 59.26 89.19 137.14 194.03 231.15Trade Receivables 61.03 65.20 64.15 99.70 139.63Cash and Cash Equivalents 7.03 6.87 10.33 13.24 49.08Financial Assets 1.62 1.71 1.47 1.01 2.64Other current Assets 0.54 0.99 9.09 4.61 26.42Total current assets 129.48 163.96 222.18 312.59 448.92Total Assets 160.99 214.39 308.78 425.81 576.36

Equity & LiabilitiesEquity 83.42 110.39 48.33 281.93 431.47Non current liabilitiesFinancial Liabilities 2.41 6.45 12.30 4.10 6.13Provisions 0.95 1.35 2.47 3.73 5.57Other Liabilities 4.30 5.11 0.36 0.54 0.41Total non current liabilities 7.66 12.91 15.13 8.37 12.11Current LiabilitiesFinancial Liabilities 58.27 76.38 230.63 126.75 121.29Provisions 2.14 3.87 0.06 0.09 0.12Other Liabilities 9.48 10.83 14.63 8.66 11.37Total current liabilities 69.90 91.08 245.32 135.50 132.77Total Equity & Liabilities 160.99 214.39 308.78 425.81 576.36


25-03-2018 19

ANALYSIS

Peer Analysis

TCNS Clothing Co.Limited

Future LifestyleFashions Ltd.

Aditya Birla Fashionand Retail

Brand W, Aurelia, Wishful -Lifestyle Brands,Pantaloons, Fast

Fashion and others

ProductsEthnic - top wear,

bottom wear, drapesand combination sets

- -

EBO 521 205 -MBO 1496 - 16000LFS 1573 - -

Central Store - 44 -

Brand Factory Store - 89 -

Revenue (cr.) 842.43 4912.74 7181.41Market Cap (cr.) 4905.85 9035.74 17526.65

ROE(%) 41.50 8.85 11.60ROCE(%) 40.28 13.39 8.76

Promoter Holding 32.42% 53.48% 59.24%PAT (Cr.) 98.10 127.05 117.79PATM(%) 11.64 2.59 1.64CFO (Cr.) 41.33 551.72 595.12FCF(Cr) -10.88 -36.30 135.22D/E (x) 0.08 0.48 1.73EPS(Rs) 17.40 6.62 1.53


25-03-2018 20

Valuation

Scenario :

Based on the previous year's quarter we assume Q4FY19 to grow by 20% so Q4FY19 (E) Saleswill be 171.46 cr.

Part 1 - Based on Profit before Interest, Depreciation and tax margin

3 years Sales CAGR of TCNS is 40% but the sales growth has declined from 77.46% in FY15 to18.48% in FY18 so in this scenario it is assumed that sales will grow with a CAGR of 25%.

TTM EV/EBITDA of TCNS is 29.86 but to be on the conservative side, we have assumed theEV/EBITDA to be 25.

We have as taken 3 years average PBIDTM (%) which is 15%.

FY19 (E) Sales = 1028.76 cr.

FY20 (E) FY21 (E)SALES 1285.95 1607.44

TTM PBIDTM (%) 15% 15%PBIDT (cr.) 192.89 241.12

EV/EBITDA (x) 25 25EV (cr.) 4822.31 6027.90

MCap (cr.) 4867.86 6073.45No. Of shares (cr.) 6.13 6.13

Price (Rs.) 794.10 990.77

Sales (in cr.)Q1FY19 236.6Q2FY19 320.5Q3FY19 300.29MFY19 857.3

Sales (in cr.)9MFY19 857.3Q4FY19 (E) 171.46FY19 (E) 1028.76


25-03-2018 21


In this case, it is assumed that the sales will grow with a CAGR of 30% and rest of the factorswill remain the same.

FY20 (E) FY21 (E)SALES 1337.39 1738.6


EV/EBITDA (x) 25 25EV (cr.) 5015.21 6519.75


Price (Rs.) 825.57 1071.01


In this case, it is assumed that the sales will grow with a CAGR of 35% and rest of the factorswill remain the same.

FY20 (E) FY21 (E)SALES 1388.83 1874.92


EV/EBITDA (x) 25 25EV (cr.) 5208.10 7030.93


Price (Rs.) 857.04 1154.40


25-03-2018 22

Conclusion

Recommendation

TCNS Clothing Ltd. is India’s leading women’s branded Apparel Company in terms of total numberof exclusive brand outlets. It has strong distribution network with 521 Exclusive brand outlets,1573 Large format store outlets and 1496 Multi-brand outlets, located in 31 states and Unionterritories in India. And it also has six Exclusive brand outlets in Nepal, Mauritius and Sri Lanka.They launch more than 1600 products every year and the product portfolio includes top-wear,bottom-wear, drapes, combination-sets and accessories. It maintains an asset-light businessmodel and has healthy relationship with job-workers and suppliers. The company plans toannually open approximately 75 to 85 EBO in IndiaTCNS has three brands - W, Aurelia and Wishful. But changes in consumer preferences andfashion are a concern for this industry. Also, the cash conversion cycle of the company is 76 dayswhich is again a concern. It also has major competition form the unorganized sector as it formslarge part of this industry.We are neutral on this stock due to limited upside of about 25% - 30% with horizon of 2-2.5 years.


25-03-2018 23

Sources TCNS Clothing DRHP Investor Presentation Conference Call BSE website Web based Software – Ace Analyser

Name Designation Email IdTejas Jariwala Research Head [email protected] Zaveri Sr. Research Analyst [email protected] Patel Sr. Research Analyst [email protected] Agarwal Assistant Research Analyst [email protected] Pareek Assistant Research Analyst [email protected] Patel Assistant Research Analyst [email protected] Modi Assistant Research Analyst [email protected] Nalbandh Sr. Research Executive [email protected] Patel Jr. Research Executive [email protected] Bakshi Jr. Research Executive [email protected]


25-03-2018 24

Full Form & Glossary

Abbreviation Full FormBV Book ValueCAGR Compound Annual Growth RateCAPEX Capital ExpenditureCOGS Cost of Goods SoldDPS Dividend Per ShareEBIT Earnings before interest and taxesEBITDA Earnings before interest, tax, depreciation and amortizationEPS Earning Per ShareEV Enterprise ValueFY Financial YearGP Gross ProfitHY Half YearMCap Market capitalizationNAV Net Asset ValueNII Net Interest IncomeNOI Net Operating IncomeNOPAT Net Operating Profit after TaxNPV Net Present ValueOCF Operating Cash FlowOI Operating IncomeP&L Profit & LossP/E Price/Earnings RatioPAT Profit After TaxPATM Profit After Tax MarginPBT Profit Before TaxQOQ Quarter on QuarterRE Retained EarningROA Return on AssetsROCE Return on Capital EmployedROE Return on EquityROI Return on InvestmentROIC Return on Invested CapitalRONA Return on Net AssetTTM Trailing Twelve MonthWC Weighted Average Cost of CapitalYOY Year over Year


25-03-2018 25

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https://sensibleinvestingblog.files.wordpress.com/2018/06/iex-report.pdf

https://sensibleinvestingblog.files.wordpress.com/2018/05/kcp-ltd.pdf

https://sensibleinvestingblog.files.wordpress.com/2018/05/tci-express1.pdf

https://www.slideshare.net/KARANAGARWAL32/hotel-sector-111278681


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Disclaimer

Research Analyst Details

Name: Radhika Modi Email Id: [email protected] Ph: +91 0261-6725518

Analyst ownership of the stock: No

Details of Associates: Not Applicable

Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their)personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is orwill be directly or indirectly related to the specific recommendation(s) or views contained in this research report.

Disclaimer: www.jainam.in is the domain owned by Jainam Share Consultants Pvt. Ltd.

SEBI (Research Analyst) Regulations 2014, Registration No. INH000006448

The views expressed are based solely on information available publicly and believed to be true. Investors are advisedto independently evaluate the market conditions/risks involved before making any investment decision.

This report is for the personal information of the authorized recipient and does not construe to be any investment,legal or taxation advice to you. This report should not be reproduced to any other person in any form. This documentis provided for assistance only and is not intended to be and must not alone be taken as the basis for an investmentdecision. Jainam Share Consultants Pvt. Ltd. or any of its affiliates or employees shall not be in any way responsiblefor any loss or damage that may arise to any person from any inadvertent error in the information contained in thisreport. Neither Jainam Share Consultants Pvt. Ltd., nor its employees, agents nor representatives shall be liable forany damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits thatmay arise from or in connection with the use of the information. Jainam Share Consultants Pvt. Ltd. or any of itsaffiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matterpertaining to this report, including without limitation the implied warranties of merchantability, fitness for aparticular purpose, and non-infringement.

The recipients of this report should rely on their own investigations. Jainam Share Consultants Pvt. Ltd. and/or itsaffiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in thisreport. Jainam Share Consultants Pvt. Ltd. has incorporated adequate disclosures in this document. This should,however, not be treated as endorsement of the views expressed in the report. We submit that no materialdisciplinary action has been taken on Jainam Share Consultants Pvt. Ltd. by any regulatory authority impacting EquityResearch Analysis.

mailto:[email protected]


25-03-2018 27

Disclosure (SEBI RA Regulations) Yes / NoWhether the research analyst or research entity or his associate orhis relative has any financial interest in the subjectcompany/companies and the nature of such financial interest

No

Whether the research analyst or research entity or his associates orhis relatives have actual/beneficial ownership of 1% or moresecurities of the subject company (at the end of the monthimmediately preceding the date of publication of the research reportor date of the public appearance)

No

Whether the research analyst or research entity or his associate orhis relative has any other material conflict of interest at the time ofpublication of the research report or at the time of publicappearance

No

Whether it or its associates have received any compensation fromthe subject company in the past twelve months

No

Whether it or its associates have managed or co-managed publicoffering of securities for the subject company in the past 12 months

No

Whether it or its associates have received any compensation forinvestment banking or merchant banking or brokerage services fromthe subject company in the past 12 months

No

Whether it or its associates have received any compensation forproducts or services other than investment banking or merchantbanking or brokerage services from the subject company in the past12 months

No

Whether the subject company is or was a client during twelvemonths preceding the date of distribution of the research report andthe types of services provided

No

Whether the research analyst has served as an officer, director oremployee of the subject company

No

Whether the research analyst or research entity has been engaged inmarket making activity for the subject company

No

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