Lovable Lingerie Limited is a leader in women inner ware market with its well-known brands Lovable and Daisy Dee. Like page has shown a CAGR of > 25% for last 5 years. It has all the hallmarks of a consumer business. Rising margins, low working capital and high return ratios. We are all aware of the consumer centric theme being played here as well as like of Page Ind.
This came across on my radar after the recent fall of 25% which made it interesting.
This is a high RoE business the returns look depressed because of the cash of approx. 100 crores lying on the balance sheet.
If one excludes this cash the RoE jumps to 30%+. This business can survive on low capital it is just the mentality of hording cash which has brought the RoEs low. Last few quarter has seen a rise in working capital as the company has been adding new distributors and now its products reach around 10K distributors.
The stock could rerate if company comes out with a high dividend payout policy like Page industry.
Some brokers are predicting an EPS of around 16 for FY13 and 19 for FY14. On a price of 297 it is quoting at a P/E of 19 FY13 and 16 times FY14 numbers a substantial discount to Page Industries.
Certainly it does not deserve a P/E at levels of Page unless it also starts distributing the surplus it generates.
Here are a few broker reports to give you the latest update
http://breport.myiris.com/ARSL/LOVLINGE_20130214.pdf
rupa & Co for some timepass
http://content.icicidirect.com/mailimages/IDirect_RupaCo_Q3FY13.pdf
Numbers from Screener.in
Narration |
Mar-06 |
Mar-07 |
Mar-08 |
Mar-09 |
Mar-10 |
Mar-11 |
Mar-12 |
Trailing |
Best Case |
Worst Case |
Sales |
30.66 |
41.54 |
60.06 |
69.24 |
86.96 |
104.04 |
132.99 |
149.78 |
170.00 |
169.39 |
Expenses |
25.54 |
36.02 |
52.72 |
60.73 |
70.45 |
84.27 |
109.91 |
126.03 |
138.85 |
142.53 |
Operating Profit |
5.12 |
5.52 |
7.34 |
8.51 |
16.51 |
19.77 |
23.08 |
23.75 |
31.15 |
26.86 |
Other Income |
0.05 |
0.04 |
0.12 |
0.11 |
0.03 |
0.08 |
6.73 |
7.98 |
- |
- |
EBIDT |
5.17 |
5.56 |
7.46 |
8.62 |
16.54 |
19.85 |
29.81 |
31.73 |
31.15 |
26.86 |
Depreciation |
0.17 |
0.21 |
0.28 |
0.39 |
1.31 |
1.37 |
1.50 |
1.77 |
1.77 |
1.77 |
EBIT |
5.00 |
5.35 |
7.18 |
8.23 |
15.23 |
18.48 |
28.31 |
29.96 |
29.38 |
25.09 |
Interest |
0.55 |
0.25 |
0.64 |
1.37 |
1.23 |
0.78 |
0.59 |
0.94 |
0.94 |
0.94 |
Profit before tax |
4.45 |
5.09 |
6.54 |
6.87 |
13.94 |
17.65 |
27.71 |
29.02 |
28.44 |
24.15 |
Tax |
1.53 |
1.79 |
2.38 |
0.85 |
3.46 |
4.38 |
6.10 |
6.64 |
23% |
23% |
Net profit |
2.89 |
3.18 |
4.16 |
2.87 |
10.81 |
14.12 |
21.65 |
22.38 |
21.93 |
18.62 |
EPS |
13.32 |
13.05 |
11.09 |
|||||||
Price to earning |
- |
- |
- |
- |
- |
29.17 |
30.80 |
22.32 |
27.43 |
22.32 |
Price |
297.35 |
358.08 |
247.45 |
Mar-06 |
Mar-07 |
Mar-08 |
Mar-09 |
Mar-10 |
Mar-11 |
Mar-12 |
|
Equity Share Capital |
0.50 |
0.50 |
1.50 |
1.50 |
7.50 |
16.80 |
16.80 |
Reserves |
5.47 |
6.56 |
10.49 |
13.18 |
16.86 |
124.43 |
142.17 |
Secured Loans |
4.52 |
3.28 |
5.54 |
3.71 |
0.29 |
- |
3.44 |
Unsecured Loans |
- |
3.00 |
1.50 |
2.68 |
0.04 |
- |
- |
Total |
10.99 |
13.84 |
19.03 |
21.07 |
24.69 |
141.23 |
162.41 |
Net Block |
2.69 |
3.13 |
3.58 |
13.19 |
12.79 |
12.94 |
23.44 |
Capital Work in Progress |
- |
- |
- |
- |
- |
- |
3.78 |
Investments |
- |
- |
1.00 |
1.00 |
1.98 |
93.06 |
96.12 |
Working Capital |
8.30 |
10.71 |
14.44 |
6.88 |
9.92 |
35.23 |
39.07 |
Total |
10.99 |
13.84 |
19.03 |
21.07 |
24.69 |
141.23 |
162.41 |
Debtors |
- |
- |
6.09 |
8.71 |
13.64 |
10.58 |
15.47 |
Inventory |
- |
- |
16.61 |
13.53 |
13.07 |
22.36 |
33.61 |