Bang Overseas Limited – IPO

Business of Bang Overseas Limited
 

Bang Overseas was incorporated in the year 1992 and is in the business of fashion fabrics and ready to wear requirements in apparel, retail and textile segment. The company has evolved from trading in textiles in its early days and then moving to conceptualizing, designing and outsourcing of fashion fabrics from countries like Turkey, Portugal, Mauritius and other European countries.  Bang Overseas also has a seasonal fabric collection in textiles branded as “Bodywaves” which is marketed through their own distribution and sales channel. The company also launched ready to wear men’s garments under the brand name of “Thomas Scott” in the year 2002 and in the year 2005 started their first apparel manufacturing unit in Bangalore and since then have started a second apparel manufacturing unit as well. The capacity of these units right now is 720,000 and 540,000 units per annum. And the products are sold through company owned retail outlets as well as stores like Shopper’s Stop, Globus and others.  Going forward the strategic focus for Bang Overseas would be expansion of manufacturing facilities with a proposed manufacturing unit in Bangalore with a capacity of 600,000 pieces per month, expanding the retail outlets from 12 to 100 spread across India and expansion of product range by entering into women wear in the casual as well as formal categories. On top of this the company also plans to enter into accessories like sunglasses, belts, time wear, fashion jewellery and fragrances.
 

Financials of Bang Overseas Limited
 

The revenues of Bang Overseas has steadily increased in the past few years and there has been a considerable jump in the last year due to the Bangalore unit becoming active. The total sales for the year ending March 2007 was Rs.966.22 million up from Rs. 446.89 million in the preceding year and for the six months ending Sep 2007 this figure stood at Rs. 650.6 million. The profit after tax corresponding to this was Rs.108.68 million, Rs.21.5 million and Rs.70.38 million respectively.
 

The EPS for 2006-07 was Rs.11.65, 2005-06 was Rs. 2.39 and 2004-05 was Rs. 0.83 on a consolidated basis. If one takes a weighted average with the weight of the latest years being 3,2 and 1 respectively the EPS comes out to be Rs.6.76 and the P/E multiple comes to 30.62 for a price of Rs. 207. The company is proposing a price band of Rs. 200 – 207.
 

The Bang Overseas Limited IPO opens at January 28, 2008 and closes on January 31 2008.
 

IPO Grading Report by CARE for Bang Overseas – 2 out of 5
 

The IPO has been assigned a rating of 2 on a scale of 1 to 5 with 5 being strong fundamentals and 2 being poor fundamentals. The reason attributed by CARE for this low rating are as follows:
 

1.       Small size of operation and order dependant and seasonal business.
2.       Recent compliance of corporate governance practices.
3.       Significant portion of revenues coming from trading division
4.       Present focus only on one segment of Men’s apparel and a fairly new and lesser known brand.
5.       Fragment and highly competitive apparel industry in which the company operates.
 

Some of the positives of the company as indicated by CARE are good track record of the promoters, successful operations of textile business and a growth in revenues as exhibited in the last couple of years.