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SCOTS GARMENTS INTIAL PUBLIC OFFERING:

Scotts Garments Limited is incorporated in 1992; it’s a Bangalore, Karnataka Based Company.                Mr. Naseer Ahmed is the Chairman and Managing Director of the Scots. It’s Business of garment manufacturing. In addition to manufacture superior quality garments, company also provides additional facilities such as embroidery, printing, dyeing and washing. Scotts Garments export their readymade knitted and woven apparel to international clients including Denmark, Gander Mountain – USA, S Oliver, Frankfurt, C&A buying and Germany.

The Company Scotts Garments is specializing in tailor made products for men, women & kids. Products manufactured by the Company includes Shirts (Cotton & Denim) Tops, Skirts, Trouser (Cotton & Denim), Shorts, Cargos, Knitted Garments, T-Shirts (Basic and Embroidered), Sweats and Jerseys. They export their quality products to several MNC’s into more than 20 countries across the Globe. They have set up an exclusive display showroom at Apparel Export Promotion Council in Gurgaon.

Scotts has also set up a 2.1 M.W capacity windmill at Bellary in Karnataka State. Scotts Garments has also entered into Wheeling and Banking agreement with Gulbarga Electricity Supply Company Limited for the sale of the power generated through the wind mill. The company has also signed a Wheeling and Banking agreement with Tamil Nadu electricity board for the sale of power through wind mill at Tirunelveli District in Tamil Nadu.

Objects of the Issue:

 1. Scenery up of unit for Trouser manufacturing and Knitting and Fabric Processing at Doddaballapur in        

    Karnataka State.

2. Margin Money for working capital of new unit.

3. General corporate purpose and Meet the issue expenses.

 

Issue details:

  •  IPO opens: 25-29 Apr 2013
  • Issue Type: 100% Book Built Issue IPO
  • Price band: Rs. 130 to Rs. 132 per share
  • Face value: Rs. 10
  • Issue Size: 10,506,954 Equity Shares of Rs. 10
  • Minimum bid: 100 shares
  • Minimum investment: Rs. 13,000
  • Lead managers: Canara Bank and Keynote corp. services Ltd
  • Registrar: Link Intime India Pvt Ltd
  • Listing: BSE / NSE
  • CARE Rank:  Grade 3 to this IPO indicating at average fundamentals of the company

Company Financial Review:

  • Scotts Garments has posted 13% to 18% annualized growth in terms of revenue in the last five years. The revenues have increased from Rs. 503 Crores (FY2010-2011) to Rs. 566 Crores (FY2011-2012).
  • Scotts Garments has been operating around 7% margins up to FY 2010-11. For FY2011-12, the margins showed a vertical jump to 14.85% due to increase in extra income. For Seven months ended Oct 12, the margins are at 6.09%. The margins are stabilized around 6% -7% in the last five years.

 

SCOTT GARMENT S  - FINANCIALS

Financials

2008-03

2009-03

2010-03

2011-03

2012-2003

7 Months Ending                  Oct-2012

Revenue [Rs in Lakhs]

33,275.95

37,443.56

43,458.98

50,348.88

56,613.29

33,533.11

Profit [Rs in lakhs] after Tax

2,224.75

2,721.48

2,784.24

3,493.06

8,403.95

2,041.95

Profit %

6.69%

7.27%

6.41%

6.93%

14.84%

6.09%

Revenue Growth % YoY

--

13%

16%

16%

12%

18%

 

Year Ended

EPS [Rs.]

WEIGHT

March 31, 2010

10.41

1

March 31,2011

13.06

2

March 31,2012

31.43

3

Weighted Average EPS

21.80

--

 

  • Minimum Investment is Rs. 13,000/- [Thirteen Thousand Rupees Only] any Investor can manage to pay for Invest which is a good Sign.

 

Conclusion/Asset Strategy:

  1. In BRLM's performance front, Keynote Corporate had mandate for 17 IPOs out of which 8 failed to give listing day gains. For Canara Bank this is perhaps first mandating after very long.
  2. If we characteristic the annualized earnings on the post IPO equity base of Rs. 38.98 Crores then the issue price is at a P/E of 14.5x. Its peers are trading between 10x to 16x which indicate that the issue price is insistently priced. Although company has been doing well in terms of revenues and margins, due to its high issue price.
  3.  Even though garment industry is balanced for bright prospects ahead as per recent budget, bearing in mind listing in "T "group for initial period, it is better to buy at discount after post listing.

 

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* Disclaimer: These recommendations are based on the theory of technical analysis and outlook of the market performance. Readers those who buy and sell securities based on the above information in this column are solely responsible for their actions. The author won't be liable or responsible for any sort of financial and legal loses suffered by the traders.