TCNS Clothing makes weak debut; stock settles 7% below issue price

TCNS Clothing settled at Rs 665, down 7.1% against its issue price of Rs 716, after listing at par on the NSE.

Shares of TCNS Clothing settled at Rs 665 per share on the National Stock Exchange (NSE) on Monday, falling 7.12% from their issue price of Rs 716 per share after making a listless debut on the bourses by opening at par against its issue price. It opened at Rs 715, a tad below its issue price.

The stock touched a low of Rs 626.60 on the BSE and Rs 627.55 on the NSE in intra-day trade.

The initial public offer (IPO) of the women's apparel maker was got a huge response, subscribed 5.27 times overall. The Rs 11.25-billion public offer received bids for 57.98 million shares against the total issue size of around 11 million data available with the NSE showed.

The category reserved for qualified institutional buyers (QIBs) was subscribed over 13 times, while those of non-institutional and retail investors by 5 times. Retail individual investors portion, however, was undersubscribed by 0.67 times or 67%, data shows.

TCNS Clothing Company, which sells its products under W, Aurelia and Wishful brands, also raised over Rs 3.37 billion from anchor investors.

“TCNS stands out in the ethnic wear segment due to scaled up operations with 3 brands across price points, team of 37 designers with new products every 3 weeks, supply chain with 225 vendors and 78 job work suppliers, around 60% gross margins which enable spend on distribution and brand building, 3456 points of sale across EBO’s, LFS and MBO’s with a successful franchise based EBO model, professional management and debt-free balance sheet with 3.5x inventory turns and working capital at 32% of sales,” analysts at Prabhudas Lilladher had said in an IPO note.

“TCNS is looking at around 75 new EBO additions/year which would enable 17% sales CAGR, 20% EBIDTA CAGR and 18.5% PAT CAGR (excluding ESOP provisions) over FY18-21. The stock is being offered at 33.7xFY18 EPS (Before ESOP Provisions) which offers scope for decent gains over the medium term given strong growth outlook,” it added.