IPO note - Koutons Retail India Limited.
*Page 1* *(In %)* *Pre-Issue * *Post-Issue * 76.13 66.63 23.29 21.32 0.58 0.52 - 0.16 - 11.37 100.00 100.00 27,943,500 30,551,397 *KRIL* *Industry Avg.* 4,023.97 51,377.80 702.65 4,430.80 *FY 2007* *FY 2006* *FY 2005 FY 2004* 61.38 14.60 Sales 4,023.97 1,583.44 579.45 310.67 17.46 8.62 Total Income 4,036.17 1,583.85 581.46 317.53 8.57 6.74 Optg Profit 702.65 255.75 48.25 22.30 32.78 & 36.76 13.04 Net Profit 344.87 131.98 19.29 8.82 20.12 & 22.57 EPS* 11.29 4.32 0.63 0.29 Share capital 273.44 49.90 48.44 13.44 Res&Surplus 288.40 150.77 18.55 28.82 Networth 561.84 200.67 66.99 42.26 Total Debt 2,094.30 512.58 174.81 116.47 Book Value* 18.39 6.57 2.19 1.38 *(KRIL)* *IPO - ANALYSIS* Total Equity Share in Issue Employee Reservation Portion QIB 2.08 Promoters & PAC *Koutons Retail India Limited* Of Which Reserved for:- *Price Band* *SUBSCRIBE * *Sector : Textiles Readymade Apparel * Corporate Bodies *Equity Research Desk* *Issue Summary* *September 11, 2007* www.koutons.com Price to Book Value (370 & 415) *(Rs. In Million)* 0.35 Total Operating Profit (Rs. in million) *Multiple* *Financial Snapshot* 27.94 1.04 Others Employees Sales (Rs. in million) 30.55 *Equity Share Outstanding * Prior to the issue After the issue Retail Public Total no. of shares Non - Institutional *Issue Open: September 18,2007* *Company Valuation* *The no. of shares are of the post issue equity i.e. 30.55 mn shares. *Company Snapshot* *Rs. 370 - Rs. 415* *Issue Close: September 21,2007* Net Issue To The Public 3.52 *Shareholding Pattern* 0.05 *(Shares in million)* 3.47 RONW (%) OPM (%) NPM (%) P/E (370 & 415) *Industry Scenario* *Objects of the issue: * 1. Setting up of exclusive brand outlets of KRIL. 2. Establishment of a new integrated manufacturing facility. 3. Purchase of plant & machinery. 4. Improvement of the information technology network. 5. General corporate purposes. - KRIL has shown a CAGR of 135% in topline, 216% in EBITDA & 239% in bottomline in the last three years. - Strengths are: Exclusive brand outlets; Wide netowrk of exclusive brand outlets; Low-cost sourcing abilities; Design & merchandising expertise; Wide apparel range; IT Infrastructure; Robust growth in terms of regions covered; The brand name Koutons & Charlie Outlaw. - Weakness are: High dependency on franchisee for sales of the products; Caters only to men’s category; Outsource manufacturing of some products; Manufacturing facilities are set up only in North India. - Opportunities are: The growing retail market in India; KRIL is planning to foray into garments for kids & ladies; Expanding into new geographies; - Threats are: Seasonality of the business; Exchange rate fluctuations; Stiff competition faced in this sector with large number of players in the unorganized sector. - Strategies are: Enhance manufacturing capacity; Increase geographic penentration; Target the growing segment; Strengthen the competitive position & recognition of the brands; Exports of apparel under the brand names. - The stock is available at a *P/E of 33x & 37x at the* *lower & upper band of the issue price respectively. * - India tops the annual list of most attractive countries for international retail expansion. - Retailing in India is currently estimated to be a USD 270 bn industry. - Growth drivers of the industry are: Changing demographic profile; Rising income level; Consumer spending habit; Urbanization; Retail space; Mall culture; Retail formats preferred in India. - Indian apparel market trends: i) Malls are expected to be one of the main growth drivers of apparel retailing in India, as such organized retail spaces offer large areas to fashion products; ii) Existing apparel brands & retailers have started exploring the potential of the smaller cities & expanding their retail network. There has been 145% growth on an average in retail presence in 2006 from 30% in 2005; iii) In terms of opening new retail outlets, apparel retailers & brands attained 84% growth in opening up of number of outlets in 2005 to 113% in 2006. - Globally private labels contribute to 17% of retail sales & are growing at 5% pa. Private labels provide higher margin to the retailers simultaneously offering lower price to the consumers. This is a strategy adopted globally & now is extensively used by Indian retailers. Koutons_Retail_India_Limited_11_September_2007.pdf
