Dressing up

IPO REVIEW

(In Rs crore)

FY05

FY04

% Chg

Operating income

107.29

55.24

94.23

Other income

2.37

0.05

4640

Operating profit

11.08

3.54

212.99

OPM %

10.33

6.41

-

Net profit

7.26

1.80

303.33

NPM %

6.77

3.26

-

EPS

7.57

6.12

-

Trailing P/E at Rs 60

8x

-

-

Trailing P/E at Rs 70

9x

-

-

 The company is very small as compared to established textile majors like Bombay Dyeing (FY05 net sales Rs 1026 crore), Alok Industries (Rs 1225 crore) and Welspun (Rs 475 crore).  Analysts expect BRFL to double revenues and triple profits in FY06 to Rs 203.3 crore and Rs 22.8 crore. Going by the growth seen in last 2-3 years, this looks possible. If BRFL makes the targeted Rs 22.8 crore, the stock is discounted between 13-15 times on a forward basis in the Rs 60-70 price band.  The P/E of other textile players are; Bombay Dyeing (11.28x), Alok Industries (10.9x), Welspun (17.8x), Abhishek Industries (11.3x), Arvind Mills (16x) and Suryalakshmi Cotton Mills (3.13x).  The issue opens on November 11 and closes on November 17. The issue would constitute 27.51 per cent of the post issue paid up capital of the company.