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Buy Monte Carlo Fashions; target of Rs 513 : Karvy

Karvy is bullish on Monte Carlo Fashions and has recommended buy rating on the stock with a target price of Rs 513 in its research report dated September 23, 2015.

September 24, 2015 / 07:24 PM IST
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Karvy's reserach report on Monte Carlo Fashions

Launched in 1984 as an exclusive woolen brand by Oswal Woollen Mills Ltd (OWML) (one of its group companies) which was engaged in spinning of woolen, cotton and other blended yarns, weaving denim fabric and manufacturing of apparel. With effect from April 1, 2011, the woolen and cotton apparel business of OWML under the brand ‘Monte Carlo’ was demerged into this company. The company primarily caters to the premium and mid-premium branded apparel segment for men, women and kids, offering a comprehensive line of woolen, cotton, cotton blended knitted and woven apparel and home furnishings through its ‘Monte Carlo Exclusive Brand Outlets’ and MBOs, including a network of national chain stores under the ‘Monte Carlo’ Brand. ‘Platine’ is its premium range for men, ‘Denim’ is the exclusive range for denim apparel, ‘Alpha’ is the exclusive range for women and ‘Tweens’ is the exclusive range for kids. The company operates two manufacturing facilities in Ludhiana, Punjab, one for its woolen apparel products and one for its cotton apparel products.

At CMP of 435, the stock is trading at 14.8x and 12.3x FY16E & FY17E P/E respectively. With expansion in EBOs, better product mix and robust business model, we expect Monte Carlo to post numbers well ahead of industry growth, We initiate a “BUY” recommendation with a target price of Rs. 513 per share at P/E of 14.5x FY17E EPS, which represents an upside potential of 18%.

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first published: Sep 24, 2015 07:24 pm

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