Singapore-based private equity firm Nalanda Capital has picked up more than 5 per cent stake in Mumbai-based Lovable Lingerie Ltd from the market. Nalanda picked up the stake in the women’s innerwear manufacturer over the past two quarters. According to VCCircle estimates, the stake has been acquired for Rs 23-25 crore.
This comes even as Nalanda is sitting on 10x returns on its five-year-old investment in Page Industries, a licensed manufacturer of the Jockey brand of innerwear for men and women in India, Sri Lanka, Bangladesh and Nepal.
Nalanda had picked up nearly 10 per cent stake in Page in October 2008 at an average price of Rs 440-450 a unit, which was one of the first PE investments in this segment. Page Industries’ scrip closed on Monday at Rs 4,413.9.
Shares of Lovable were trading at Rs 276.4, up 2.31 per cent on Tuesday at 2 pm in a Mumbai market up 0.63 per cent. The company currently has a market capitalisation of Rs 464.35 crore.
In March 2011, Lovable Lingerie raised Rs 93 crore from the public issue at the upper end of the price band of Rs 195-Rs 205 each. In a pre-IPO investment, Sequoia Capital infused Rs 20 crore and later picked up shares from the market, thus increasing its holding to 11.27 per cent in the company.
Lovable, founded in 1987, is promoted by L Vinay Reddy and has several brands such as Lovable, Daisy Dee and College Style. The company operates three manufacturing facilities – two in Bengaluru and another unit in Uttarakhand.
Lovable reported 13.6 per cent growth in top line to Rs 151.1 crore in FY13 but profit after tax slipped 12.8 per cent to Rs 18.9 crore during the year as the firm completed its capex cycle and reworked the distribution network.
“We value the stock at Rs 343 at a P/E of 20x Sept 14E earnings. Stable cotton prices, as well as 6 per cent price hike in December 2012, would help to 19 per cent earnings CAGR over FY13-15. Also, we expect other income to be higher in FY14 than in FY13,” said an Anand Rathi report on the company.
The Indian apparel sector is expected to grow from Rs 1,70,900 crore in 2010 to Rs 4,70,000 crore by 2020, representing a CAGR of 10.6 per cent, according to a report by ICICIdirect.com last year. Of this, the innerwear market, valued at Rs 14,300 crore (in 2011), is expected to grow to Rs 43,700 crore by 2020, growing at a CAGR of 13.2 per cent and outpacing the growth of the overall apparel market. The women’s innerwear segment is likely to touch Rs 30,000 crore from the current Rs 8,500 crore.
There have been several deals in this segment and most recently, Peepul Capital invested Rs 70 crore in the lingerie and sportswear startup Brandis Manufacturing and Marketing in November 2012.
(Edited by Sanghamitra Mandal)