Bangalore-based Scotts Garments is a garment manufacturing company whose product range includes trousers (cotton and denim), woven, knits, sweats and jersey. The company has entered the capital with a public issue of over 1 crore shares at a price band in the range of Rs130 and Rs 132 per share at the face value of Rs10.
The company has 15 factories and state of the art textile mills in Karnataka and Tamil Nadu. At the higher end of the price band, the company plans to raise over Rs138 crore. Through the proceeds of the initial public offer, the company plans to set up trouser-manufacturing unit at Doddaballapur in Karnataka and a knitting-and-fabric-processing unit at Kagal in Kolhapur. Financials & Concerns For FY12, the company had net profit of Rs84 crore on net sales of Rs500 crore. In comparison with the company had net profit of Rs34 crore on net sales of Rs495 crore. This growth has been fostered by one-time adjustment of sale of investment of Rs60 crore.
In the last five years, the company's financial performance has been erratic. This makes it difficult to estimate future trend of its financial performance in terms of revenues and earnings growth. The company derives 76% from Europe in FY12. The company also has concentrated exposure to a single client Best Seller. It derives 62% of its revenues from the client. Such concentrated exposure to a single client and dependence on one market can result in strong fluctuations in terms of revenues growth or decline depending the business situation.
Going ahead a lot would depend on the company's ability to diversify across geographies and clients. Bigger the diversification greater the possibility of fluctuations in its revenues.
Valuation On the valuation front, at the higher end of the price, post-issue considering fully diluted equity and annualising the company's net profits based on seven months financial performance, the company's issue is commanding a price to earnings multiple of 14.7.
This is quite expensive than most established players like Mandhana Industries, which also has presence in Europe and is trading at a price to earnings multiple of 10. Investors are advised to wait for the company's shares listing in the secondary markets and skip the issue. Business
Bangalore-based Scotts Garments is a garment manufacturing company whose product range includes trousers (cotton and denim), woven, knits, sweats and jersey. The company has entered the capital with a public issue of over 1 crore shares at a price band in the range of Rs130 and Rs 132 per share at the face value of Rs10. The company has 15 factories and state of the art textile mills in Karnataka and Tamil Nadu. At the higher end of the price band, the company plans to raise over Rs138 crore. Through the proceeds of the initial public offer, the company plans to set up trouser-manufacturing unit at Doddaballapur in Karnataka and a knitting-and-fabric-processing unit at Kagal in Kolhapur.
Financials & Concerns
For FY12, the company had net profit of Rs84 crore on net sales of Rs500 crore. In comparison with the company had net profit of Rs34 crore on net sales of Rs495 crore. This growth has been fostered by one-time adjustment of sale of investment of Rs60 crore. In the last five years, the company's financial performance has been erratic. This makes it difficult to estimate future trend of its financial performance in terms of revenues and earnings growth.
The company derives 76% from Europe in FY12. The company also has concentrated exposure to a single client Best Seller. It derives 62% of its revenues from the client. Such concentrated exposure to a single client and dependence on one market can result in strong fluctuations in terms of revenues growth or decline depending the business situation. Going ahead a lot would depend on the company's ability to diversify across geographies and clients. Bigger the diversification greater the possibility of fluctuations in its revenues.
Valuation
On the valuation front, at the higher end of the price, post-issue considering fully diluted equity and annualising the company's net profits based on seven months financial performance, the company's issue is commanding a price to earnings multiple of 14.7. This is quite expensive than most established players like Mandhana Industries, which also has presence in Europe and is trading at a price to earnings multiple of 10. Investors are advised to wait for the company's shares listing in the secondary markets and skip the issue
The company has 15 factories and state of the art textile mills in Karnataka and Tamil Nadu. At the higher end of the price band, the company plans to raise over Rs138 crore. Through the proceeds of the initial public offer, the company plans to set up trouser-manufacturing unit at Doddaballapur in Karnataka and a knitting-and-fabric-processing unit at Kagal in Kolhapur. Financials & Concerns For FY12, the company had net profit of Rs84 crore on net sales of Rs500 crore. In comparison with the company had net profit of Rs34 crore on net sales of Rs495 crore. This growth has been fostered by one-time adjustment of sale of investment of Rs60 crore.
In the last five years, the company's financial performance has been erratic. This makes it difficult to estimate future trend of its financial performance in terms of revenues and earnings growth. The company derives 76% from Europe in FY12. The company also has concentrated exposure to a single client Best Seller. It derives 62% of its revenues from the client. Such concentrated exposure to a single client and dependence on one market can result in strong fluctuations in terms of revenues growth or decline depending the business situation.
Going ahead a lot would depend on the company's ability to diversify across geographies and clients. Bigger the diversification greater the possibility of fluctuations in its revenues.
Valuation On the valuation front, at the higher end of the price, post-issue considering fully diluted equity and annualising the company's net profits based on seven months financial performance, the company's issue is commanding a price to earnings multiple of 14.7.
This is quite expensive than most established players like Mandhana Industries, which also has presence in Europe and is trading at a price to earnings multiple of 10. Investors are advised to wait for the company's shares listing in the secondary markets and skip the issue. Business
Bangalore-based Scotts Garments is a garment manufacturing company whose product range includes trousers (cotton and denim), woven, knits, sweats and jersey. The company has entered the capital with a public issue of over 1 crore shares at a price band in the range of Rs130 and Rs 132 per share at the face value of Rs10. The company has 15 factories and state of the art textile mills in Karnataka and Tamil Nadu. At the higher end of the price band, the company plans to raise over Rs138 crore. Through the proceeds of the initial public offer, the company plans to set up trouser-manufacturing unit at Doddaballapur in Karnataka and a knitting-and-fabric-processing unit at Kagal in Kolhapur.
Financials & Concerns
For FY12, the company had net profit of Rs84 crore on net sales of Rs500 crore. In comparison with the company had net profit of Rs34 crore on net sales of Rs495 crore. This growth has been fostered by one-time adjustment of sale of investment of Rs60 crore. In the last five years, the company's financial performance has been erratic. This makes it difficult to estimate future trend of its financial performance in terms of revenues and earnings growth.
The company derives 76% from Europe in FY12. The company also has concentrated exposure to a single client Best Seller. It derives 62% of its revenues from the client. Such concentrated exposure to a single client and dependence on one market can result in strong fluctuations in terms of revenues growth or decline depending the business situation. Going ahead a lot would depend on the company's ability to diversify across geographies and clients. Bigger the diversification greater the possibility of fluctuations in its revenues.
Valuation
On the valuation front, at the higher end of the price, post-issue considering fully diluted equity and annualising the company's net profits based on seven months financial performance, the company's issue is commanding a price to earnings multiple of 14.7. This is quite expensive than most established players like Mandhana Industries, which also has presence in Europe and is trading at a price to earnings multiple of 10. Investors are advised to wait for the company's shares listing in the secondary markets and skip the issue
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