'Subscribe' to Lovable Lingeri IPO: SPA Securities

MUMBAI: SPA Securities has advised investors to "Subscribe" to the initial public offering of Lovable Lingerie. The company has entered the capital market to raise between Rs 887-933 million by issuing shares in the price-band of Rs 195-205 per share.

"At the upper band of Rs 205, stock is available at an annualized FY11 EPS of Rs 10 and P/E multiple of 20.5x. This compares well with 28.1x P/E of Page Industries for FY11E. We recommend ‘subscribe’ to the issue," the report said.

Lovable Lingerie is engaged in the manufacturing of women’s innerwear. The company currently has 3 manufacturing facilities with a total installed capacity to manufacture 6.7mn pieces p.a.

It intends to introduce new sub-brands under its "Lovable" brand as well as foray into men innerwear segment. For this purpose, the company plans to increase its capacity by 2.5mn pieces p.a. by January 2012 at a capital outlay of Rs 228mn.

The proceeds will be used for setting up of manufacturing facility, brand building expenses, brand development expenses for "College Style" brand, investment in joint venture, setting up of exclusive brand outlets, setting up of retail store modules for "shop-in-shop" and for up-gradation of design studios.