Get a better idea of Credo Brands' fit post listing
Credo Brands Marketing, an apparel retailing company known for its flagship men's apparel brand Mufti, is rolling out a ₹550-crore offer for sale (OFS) in which the promoter and the promoter group are diluting their stake from 66.7% to 53.6%, with no money coming to the company.
Business
At the end of September 2023, the company sold its products through 404 exclusive brand outlets, 71 large-format stores, 1,332 multi-brand outlets as well as online marketplaces. About 90% of its revenues are earned from offline channels.
Financials & Growth Prospects
Performance has seen a steady improvement over the past 3 years — with FY21 bearing the brunt of the pandemic and FY23 being the first full year of recovery. It's revenues have doubled to ₹498 crore during this period and net profit has jumped from ₹3.4 crore in FY21 to ₹77.5 crore in FY23. Ebitda margin rose from 19.8% in FY21 to 32.8% in FY23.
For Q1 of FY24, it was not able to maintain the same momentum. While revenues stood at ₹118.5 crore, the net profit was at ₹8.5 crore and the Ebitda margin at 25.5%. Management has ascribed this to seasonality wherein second and fourth quarters are stronger in performance.
While it expects to maintain its FY23 profit margins, its high number of debtor days (113 days) and inventory days (198 days) for June quarter pose a concern. Debt equity ratio stood at 0.72 at end of June quarter.
Valuation
At an implied market cap of over ₹1,800 crore, the IPO values the company at 25 times its estimated annualised earnings for FY24. Bigger peer like Kewal Kiran Clothing are trading at a consolidated PE of 33.6.
