Subscribe to Lovable Lingerie IPO: SBICap Securities

The 45.5 lakh shares initial public offering of Lovable Lingerie - women's innerwear manufacturer - opened for subscription. SBICap Securities has recommended subscribing the IPO, according to its report dated March 5.

Lovable plans to raise up to Rs 93.28 crore via issue of 45.5 lakh equity shares at higher end of price band of Rs 195-205 a share, which are proposed to be used for a manufacturing facility, brand promotion and retail expansion.

The report says, "Lovable Lingerie is currently valued at 19.5x and 20.5x of its 9MFY11 annualised earnings at the lower and upper price band respectively. Post issue the company will have debt of Rs 16.33 crore implying a post issue debt to equity ratio of 0.16x. While comparing the company with its peers based on their trailing twelve months earnings, Lovable Lingerie seems fairly valued on most valuation parameters. The higher margins also justify the earnings multiple. The company has recently carried out a QIP issue of Rs 20 crore issuing 10 lakh shares, at a price of Rs 200/share. Hence, we recommend investors to subscribe to the IPO."

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