I think it’s valued same as peers like cantabil retail, TCNS clothing killer and other brands (excluding retailers like pantaloons, etc). For whatever reason, the stock didn’t do well at listing.
I’ve looked at this as an opportunity instead of worrying about why it’s not priced higher at IPO and didn’t list with good premium.
Anti thesis :
- Margin improvement from 10% to 33%. Margins may or may not be sustainable
- Wage hikes for lbaour could hit gross margin and so ebidta and profit margins
These are the only major risk I could see
Other risks could be not growing in 14-15% but as the industry is growing in this rate. This growth rates are within reach
Thesis:
- Not a asset heavy business, as the manufacturing is outsourced
- Operating leverage will play out as Same store sales growth continues
Valuation rerating upwards is a major part of investment thesis for me (in addition to 14-16% growth and operating leverage)
Disc : No reco
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