Add TCNS Clothing, fair value Rs 380: Kotak Institutional Equities

Kotak Institutional Equities has maintained add rating on TCNS Clothing and revised fair value to Rs 380. The stock ended up 2.15 per cent at Rs 349 on Thursday while the BSE Sensex closed 1265.66 points up (+4.23 per cent) at 31,159.62.

TCNS Clothing Co. Ltd., incorporated in 1997, has a market cap of Rs 2145.78 crore.

Investment Rationale


TCNS’ efforts to ramp up revenues across various channels will see challenges in FY2021 given Covid-related shutdowns and resultant loss of revenues, said Kotak. Rs 1.7 billion of cash in hand and various efforts to cut costs provide some comfort, and may result in YoY flat revenues and earnings in FY2021, said Kotak. TCNS will have to accelerate the launch of its jewellery and footwear range to improve store same store sales growth, said Kotak.

Financials

TCNS Clothing's key products/revenue segments include Apparel which contributed Rs 1147.87 crore to sales value (99.99 per cent of total sales) and Other Operating Revenue which contributed Rs 0.08 crore to sales valuefor the year ending March 31, 2019.

For the quarter ended 31-12-2019, the company reported standalone sales of Rs 328.99 crore, up 2.54 per cent from last quarter sales of Rs 320.84 crore and up 9.59 per cent from last year same quarter sales of Rs 300.20 crore. The company reported net profit after tax of Rs 55.03 crore in latest quarter.