Hem Securities has come out with research report on Bang Overseas IPO. It has advised to invest in the issue for listing gains.
Bang Overseas, a provider of fashion fabrics and ready-to-wear requirements in apparel, textile and retail segment, has opened for subscription with an initial public offering (IPO) of 3,500,000 equity shares of Rs 10 each for cash at a price to be decided through a 100% book-building process. The issue will constitute 25.81% of the post-issue paid-up capital of the company.
The issue will close for subscription on January 31, 2008. The price band is between Rs 200 and Rs 207 per equity share.
Hem Securities report on Bang Overseas IPO
Bang Overseas is presently providing fashion fabrics and meeting ready to wear requirements for its customers in apparel, textile and retail segment. The company is conceptualizing and designing fashion fabrics and outsourcing the manufacturing process of the same from the countries like Turkey, Portugal, Mauritius and other European countries.
The company started its own first apparel manufacturing unit in Bangalore in the year 2005 in the name of Reunion Clothing Company with an installed capacity of 350,000 pieces per annum and in the year 2006 the company started its second manufacturing unit in the name of Formal Clothing Company with an installed capacity of 360,000pieces per annum.
The company products are presently retailed through 157point of sales comprising of Retail Outlets, Large Format Stores like Shoppers Stop, Pyramid, Globus, the LOOT, SAGA and Multi Brand Outlets spread all over India.
Investment Rationale
* The company existing brand “Thomas Scott” was introduced in the year 2002 with an objective of tapping the branded apparels for men’s wear segment. This brand of the company has strong brand image and has contributed Rs 52.48 millions and Rs 105.05 million during 6 months period ended September 30, 2007 and FY2006-07 respectively in the total garment sales of company aggregating to Rs 223.74 millions and Rs356.59 millions.
* The company is having strong chain of retail outlets spread across the big cities of India. The company is having twelve retail outlets including three franchises which are established under the brand name “ThomasScott” retail outlets. These retail outlets are located at Mumbai, Rajkot, Surat, Gurgaon, Bangalore, Kolkata, Thane, New Delhi and Ahmedabad.
* The company is having in – house designing capabilities with a dedicated designing team, responsible for the continuous development of newand innovative designs and fashion. The company is having strong understanding of fashion because of ongoing learning process, through different fairs andtrend analysis, forecast reports and through international magazines.
* The company is having strong distribution network. The company sells its fashion fabric through in –house marketing team and distributors on regular and ongoing basis to its various clients in garments segment. The distribution system of the company is supported by strong logistic and warehousing system.
Concerns
* The company is having limited experience in manufacturing activities and its revenues are mainly from trading activities. The company limited experience in setting and operating manufacturing activities may impact its business operations to great extent.
* The company has not yet identified locations to open and operate its retail outlets and franchisee and any delay in identifying ideal location at competitive prices could adversely impact the company’s business and financial operations.
* The company has also not identified location in cities to purchase warehouse and any delay in timely and cost effective completion of proposed activities could adversely impact its total cost of setting up this expansion programme.
Valuation
The company at the price band of Rs 200 – 207 will have a price to earning of 19.27 – 19.94 at a post issue earning per share of Rs 10.38 and will have a price to book value of 8.44 – 8.74 at a post issue book value of Rs 23.70.
The company is having CAGR of 62% in the top line and 335% in the bottom line. The company with the strong financial background is expected to provide some handsome returns.
Therefore, going by the company financials and brand visibility we find company attractive source of investment for listing gains.
Source: Moneycontrol.com
Wednesday, January 30, 2008
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