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Thursday, August 11, 2011

Lovable Lingerie Ltd:-Buy/sell/,growth prospects and recommendation,news and results,target price and analysis,view and outlook,multibagger

Scripscan:Lovable Lingerie Ltd

Story:With flagship brands "Lovable" and "Daisy Dee", LLL is one of the leading women Innerwear manufacturers in India, with product basket covering brassieres, panties, camisoles, home wear, shape wear, foundation garments and sleep wear products."Lovable" is an 85-year-old brand with global presence.It is also one of the established and key brands in the women premium and super premium segment.On the other hand, "Daisy Dee" is a leading brands in the mid market segment.The company has in-house design studio for developing innerwear products and creating styles to meet global standards.The concessionaire-retailing model as shop in shop modules in large format stores helps it in displaying its complete range of products. Brisk expansion of organized retail is positive for the branded innerwear segment on the back of improving disposable income.The promoters of the company have vast experience in branding and developing of undergarments. The company operates in an industry characterized by constant product innovation due to changing consumer preferences, brand loyalty and evolving fashion trends.Although the group companies of the company agreed to not to carry on the business of the company, the agreement doesn't apply to production, distribution, supply and retail of men's innerwear products and outer wear apparel products in which the company plans to foray. This is an added risk at a time when the company is using Rs 25 crore of IPO proceeds for investing in the JV that will venture into men's wear, too.This may have conflicts of interest arising in future with the company's business.The trademark of the "Lovable" acquired by the company bears names of cities New York, Milan and Tokyo, in which the company doesn't have operations.The company is into a highly competitive and labor-intensive sector of the textile Industry.Also,majority of the IPO money is going for brand building (Rs 24 crore), most of which has to be written off through the P & L account over the next couple of years and, hence, can depress the profitability, if they are not able to step up volumes.LLL has reported strong performance in the financials for FY 2011 with 20% increase in the top line at Rs 114 crore and 37% rise in net profit at Rs 14 crore.Eps stood at 12 bucks for last fiscal ended fy10-11.Even if we counter a 40% growth this fiscal(eps of 17)Lovable still trades at 26-27 PE.Similar comparable page ind is slightly more expensive than lovable.Lovable valuations are stretched but may move up a bit in the shorter term following momentum.On the contrary,Valuations well may continue to move up and it may continue to trade overvalued as investors suddenly have got a great gusto towards domestic consumptions themes.

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