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India Equity Research Reports, IPO and Stock News
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We re-affirm Mirza International a BUY. We have earlier recommended at CMP of INR17
with a Target price of INR26 which had been achieved. However due to correction in the
stock price from INR28 to INR19, there exist an opportunity to enter into the stock. Mirza
International Limited has emerged as a frontrunner in the manufacturing and marketing of
leather and leather footwear. None the less, it has also bettered upon the projections set by
us in our earlier report. Its brand ‘RED TAPE’ has a strong footing in the footwear market.
Investment Highlights
Expansion plan to increase the capacity from 4 mn pairs/ annum to 10 mn pairs: The
company has chalked out an aggressive expansion plan for building large shoe
manufacturing facilities at Unnao and Greater Noida to increase the capacity from 4mn
pairs/annum to 10 mn pairs /annum in a period of 3 years. In this direction, the First phase
of 17 lakh pairs expansion programme at Unnao has been successfully commissioned in a
record time
Expanding Retail Outlets of RED TAPE from 50 to 200: Company's flagship brand
'REDTAPE' enjoys customer's admiration and confidence and is one of the highest selling
brands in Men's footwear market. Mirza now aims to provide lifestyle fashion solutions for
the entire family across the world by foraying into apparels; leather accessories etc. under
brand 'REDTAPE'. The company plans to have 200 exclusive REDTAPE stores from 50
stores in India by 2011.
Undervalued Stock: Stock looks to be undervalued as the company which has such a well
known brand like ‘Red Tape’ is trading at a ttm P/E of 5.5x. It discounts its FY12E EPS by
4.2x. It’s MCAP/ Sales Ratio is 0.38. It’s Book Value per share for FY11E is INR18.8
Brands of Mirza International
RED TAPE- The flagship brand of Mirza International Limited, was launched in the year
1996. The brand has today become synonymous with hi-fashion & lifestyle, owing to its
unmatched quality, skilled craftsmanship and trendy products. Endorsed by the style icon
Salman Khan, Red Tape has become India’s most loved premium lifestyle brand.
RED TAPE GAL- It is a stylish footwear range for women that bring in a fresh, energetic
and youthful appeal through its trendy designs. Introduced in March 2007, the brand is
Mirza International Limited’s first step towards tapping the immense opportunity available
in the women footwear segment. The range is available in a variety of styles and shapes and
has already become a preferred brand of the Indian women. It is endorsed by the critically
acclaimed actress Kangana Ranaut.
OAKTRAK- It is a niche brand of formal footwear, designed exclusively for the upwardly
mobile executives and businessmen. The range is both casual and urban, with the emphasis
on comfort with style. Oaktrak is sold through independents, small retailers and multiples.
Primary markets for the brand are UK and South Africa
Valuation
At the CMP of INR19, the stock discounts its FY11E EPS by 5.1x and its FY12E EPS by 4.2x.
Stock looks to be undervalued as the company which has a well known brand like ‘Red
Tape’ and Mcap / Sales ratio around 0.38 is available at a Market Cap of only INR176 crore
and P/BV of 1.01. The Stock should be re-rated and command a conservative P/E multiple
of 8x to give a Target price of INR37 (an upside of 95%) on its FY12E EPS of Rs.4.63
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We re-affirm Mirza International a BUY. We have earlier recommended at CMP of INR17
with a Target price of INR26 which had been achieved. However due to correction in the
stock price from INR28 to INR19, there exist an opportunity to enter into the stock. Mirza
International Limited has emerged as a frontrunner in the manufacturing and marketing of
leather and leather footwear. None the less, it has also bettered upon the projections set by
us in our earlier report. Its brand ‘RED TAPE’ has a strong footing in the footwear market.
Investment Highlights
Expansion plan to increase the capacity from 4 mn pairs/ annum to 10 mn pairs: The
company has chalked out an aggressive expansion plan for building large shoe
manufacturing facilities at Unnao and Greater Noida to increase the capacity from 4mn
pairs/annum to 10 mn pairs /annum in a period of 3 years. In this direction, the First phase
of 17 lakh pairs expansion programme at Unnao has been successfully commissioned in a
record time
Expanding Retail Outlets of RED TAPE from 50 to 200: Company's flagship brand
'REDTAPE' enjoys customer's admiration and confidence and is one of the highest selling
brands in Men's footwear market. Mirza now aims to provide lifestyle fashion solutions for
the entire family across the world by foraying into apparels; leather accessories etc. under
brand 'REDTAPE'. The company plans to have 200 exclusive REDTAPE stores from 50
stores in India by 2011.
Undervalued Stock: Stock looks to be undervalued as the company which has such a well
known brand like ‘Red Tape’ is trading at a ttm P/E of 5.5x. It discounts its FY12E EPS by
4.2x. It’s MCAP/ Sales Ratio is 0.38. It’s Book Value per share for FY11E is INR18.8
Brands of Mirza International
RED TAPE- The flagship brand of Mirza International Limited, was launched in the year
1996. The brand has today become synonymous with hi-fashion & lifestyle, owing to its
unmatched quality, skilled craftsmanship and trendy products. Endorsed by the style icon
Salman Khan, Red Tape has become India’s most loved premium lifestyle brand.
RED TAPE GAL- It is a stylish footwear range for women that bring in a fresh, energetic
and youthful appeal through its trendy designs. Introduced in March 2007, the brand is
Mirza International Limited’s first step towards tapping the immense opportunity available
in the women footwear segment. The range is available in a variety of styles and shapes and
has already become a preferred brand of the Indian women. It is endorsed by the critically
acclaimed actress Kangana Ranaut.
OAKTRAK- It is a niche brand of formal footwear, designed exclusively for the upwardly
mobile executives and businessmen. The range is both casual and urban, with the emphasis
on comfort with style. Oaktrak is sold through independents, small retailers and multiples.
Primary markets for the brand are UK and South Africa
Valuation
At the CMP of INR19, the stock discounts its FY11E EPS by 5.1x and its FY12E EPS by 4.2x.
Stock looks to be undervalued as the company which has a well known brand like ‘Red
Tape’ and Mcap / Sales ratio around 0.38 is available at a Market Cap of only INR176 crore
and P/BV of 1.01. The Stock should be re-rated and command a conservative P/E multiple
of 8x to give a Target price of INR37 (an upside of 95%) on its FY12E EPS of Rs.4.63
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