Introducing Mufti Menswear IPO
Credo Brands Marketing Limited (Mufti Menswear), a well-known men’s casual clothing brand, is set to create a ripple in the financial market with its initial public offering (IPO). The IPO is a bookbuild issue of Rs 549.78 crore and a complete offering of 1.96 billion shares. Mufti Menswear, whose offering will begin on December 19, 2023 and close on December 21, 2023, aims to be listed on both BSE and NSE, with a tentative listing date of Wednesday, December 27, 2023. ing. The IPO price range is set as follows. ₹266 to ₹280 per share, minimum lot size is 53 shares.
Mufti Menswear IPO Details
| IPO date | The IPO will begin on December 19, 2023 and close on December 21, 2023 |
| IPO listing date | December 27, 2023 |
| Type of problem | Book Built Issue IPO |
| face value | 2 rupees per share |
| IPO price range | 266 to 280 rupees per share |
| lot size | 53 stocks |
| Exhibition location | BSE and NSE |
| Total issue size | Rs. 549.78 billion |
About Credo Brands Marketing Limited
Credo Brands Marketing Limited, the parent company of Mufti Menswear, was established in 1999 and has been offering a wide range of casual clothing for men under its flagship brand ‘Mufti’. From humble beginnings of shirts, t-shirts and trousers, Mufti Menswear has expanded its product range to include sweatshirts, jeans, cargos, chinos, jackets, blazers and sweaters to suit different occasions and lifestyles .
As of May 31, 2023, Mufti Menswear operates an extensive retail network of 1,773 stores across India, including luxury brand stores, hypermarkets and multi-brand stores. The company’s 15-member design team helped create more than 1,348 designs for him in fiscal year 2023.
Purpose of Mufti Menswear IPO
The main purpose of the IPO is to enjoy the benefits of listing on a stock exchange and to carry out an offering of up to 19,634,960 shares. The company expects that listing will improve its name recognition and brand image, as well as provide liquidity to shareholders.
financial insights
Mufti Menswear has posted strong growth with revenue increasing by 43.54% and profit after tax (PAT) increasing by 116.88% from the financial year ended March 31, 2023 to the financial year ended March 31, 2022. It shows strong financial performance. As of June 30, 2023, the company’s performance stands at Rs 592.38 million in assets and Rs 289.88 million in net worth.
Key performance indicators include price-to-earnings ratio of 23.22, return on equity of 29.98%, return on capital employed of 28.16%, debt-to-equity ratio of 0.65, and earnings per share of ₹0.54.
Mufti Menswear IPO Price Rating
- IPO price range is Rs 266 to Rs 280 per share
- PER analysis
- Considering last year’s FY23 EPS of Rs 12.06, the P/E ratio is 23x.
- Considering the weighted EPS of Rs 7.97 over the last three years, the P/E ratio is 35x.
- Comparison with listed peers
- Arvind Fashions Limited stock price is 157 times (highest)
- Kewal Kiran Clothing Limited is trading at a P/E ratio of 40x (lowest)
- Industry average PER is 95x
- Therefore, the IPO price range of 23x to 35x P/E is fully priced.
Why invest in Mufti Menswear IPO?
- Diverse product range: Mufti Menswear’s product mix has evolved to meet the needs of a variety of consumers, from casual wear to athleisure.
- Broad retail presence: With 1,773 retail outlets across India, Mufti Menswear has a strong pan-India presence.
- Trademark value: The brand “Mufti” caters to various categories and opportunities and boasts high capital strength.
- Financial stability: The company’s financial stability is reflected in its successful growth trajectory and strong key performance indicators.
Reasons not to invest in Mufti Menswear IPO
- OFS will be transferred to the selling shareholder. The IPO proceeds only include OFS, which goes to the selling shareholders, so the company doesn’t get any benefit.
- Market competition: Operating in a highly competitive sector, Mufti Menswear faces challenges from competitors that can impact its pricing strategy and market share.
- Consumer preferences: Changes in consumer preferences or unpredictability of demand could adversely affect our business.
- Expanding our retail network: Our inability to effectively manage or expand our retail network may create challenges to our growth.
- Reliance on third party manufacturing: Mufti Menswear’s reliance on a third-party contract model for manufacturing comes with risks.
Mufti Menswear IPO – Conclusion
Mufti Menswear’s IPO offers investors an opportunity to be part of a brand that has successfully navigated the dynamic fashion industry. With a strong retail presence, diverse product range and favorable financial indicators, the company is poised for future growth.
However, potential investors should carefully consider the competitive environment and risk factors described above.
Margins for the first quarter of 2024 have declined, indicating that these margins are well priced into the IPO.
Investors who understand both these pros and cons can invest in such IPOs.
Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
