Market Price Rs 435 (FV 10) Analyst : Janak Shah (M.B.A. Finance)
Market Cap Rs 944 crs Date: 29th July 2016
Target : Rs 550 Time frame: 1 year
About the Company:
This company is part of the Oswal Woollen Mills ( Jawahar Oswal group). It has many listed companies under its fold. The group started in 1984. Monte Carlo has been awarded “Super Brand” status in woolen knitted apparels. The Brand Monte Carlo is with the company Monte Carlo Fashions Limited. It is a company with very low debt.
The company has presence in Woollens under the brand name Monte Carlo , in the cotton segment it has 2 brands and they are Alpha and Denim. In the kids segment, they have Tween , In the economy segment they have Cloak & Decker. It has also started the home furnishing products which supplies blankets, bed sheets etc.
The company has 223 EBO’s ( Exclusive Brand Outlets) , 2000 plus multi brand stores, 164 National stores and an increasing presence in south India. North India contributes to 52% of the companys sale.
For the year ending March 2016 the book value of the company is nearly 217.
For the year ending March 2015, the sales were at 582 crores and the Net profit was 59.77 crores and EPS was 27.5 crores and Rs 10 dividend per share was declared.
For the year ending March 2016 the sales were Rs 621 crores and Net profit was Rs 59 crores and EPS was Rs 27.5 which is flat as compared to year 2015.
For the year 2016-17 the EPS is expected to be Rs 37 per share.
Promoters hold about 64% stake while the Public hold 35.75% stake.
Comparisions to Peers:
The company can be compared to Kewal Kiran clothing, Kitex garments etc. The average PE of these companies are in the region of 30.
The nature of the company Monte Carlo is that it gets maximum revenue in the Q3. So the winter months that is October, November, December are the best months of the year and the company earns 55% of the revenue of the full year in that period. The company has increased the Advertisement spend from 3.4 crores to 9.7 crores. No major capex is planned for the next 2 years. This will ensure positive operating leverage. January end is the time when the results of the company will be declared for the Q3. This will provide one opportunity to book profits in the company if one is looking to exit in the medium term.
The current rate of Rs 435 it can touch 550 in the next 1 year.
( Disclosure: The analyst has no direct holdings in the company as on date of issue being published) Analyst ( Janak Shah ) is a sebi certified research analyst Registration No: INH000001717