TCNS Clothing Co. Ltd. share price target

Unimpressive revenue print led by; (1) ~7% revenue-impact (related to primary billing) of change in revenue/inventory accounting for B2B business from outright-sale model to SOR (sale or return) model; where-in revenue is booked only after actual sales happen. In SOR; inventory is on the books of TCNS.

(TCNSBR) Q2FY23 EBITDA at Rs461mn (up 53% YoY) was below consensus estimates. Company achieved its highest-ever quarterly sales at Rs3.5bn (up 46% YoY) attributable to: a) low base due to covid-induced restrictions.

EBITDA grew 64% YoY to | 63.0 crore (93% of pre-Covid levels) with EBITDA margins expanding 300 bps YoY to 19.2% (Q3FY20: 20.6%) What should investors do? Since our initiation report, the stock has appreciated ~71% (from | 400 in April 2020 to | 685 in February 2022). We believe the recent...

Revenue recovery rate improved gradually to ~75% of pre-Covid levels in Q2FY22. Festive season witnessed healthy 100% revenue recovery rate On the new product launches, the footwear range has seen strong traction and is already contributing ~10% in selected W' stores. TCNS is planning a full-scale rollout of footwear in SS22 with presence in more than 150 EBOs Undertaking category expansion (beyond its core ethnic wear) in a bid to tap opportunities across non-apparel categories. Foraying into make-up, colour cosmetics under brand Aurelia'. Over longer term, the management...

Indication of strong festive season augurs well chain infrastructure, TCNS has emerged as the market leader in women's ethnic space through its three popular home grown brands. TCNS follows an asset light business model, with production outsourced on...

Healthy store addition pipeline for FY22 with opening of 60+ new stores on a net basis (40+ stores already signed) Continues to scale up its omni distribution channel with new business...

TCNS Clothing reported decent Q4FY21 results with marginal revenue growth of 1% YoY to | 221 crore. On adjusted base, recovery was ~76% of pre-Covid levels (vs. 72% in Q3FY21). The revenue recovery rate would have been better but the pace of recovery was hampered by partial lockdowns in various states from mid-March onwards. Non-metro cities continued to recover at a swift pace with Tier II, III cites recovering at ~95% of pre-Covid levels. Stores in metro cites are lagging behind with 75% recovery rate. Gross margins remained flattish YoY at 57.4% but continue to remain below...

Driven by festive season demand, TCNS Clothing reported strong QoQ growth with revenue recovery rate reaching 72% in Q3FY21 vs. 45% in Q2FY21. The recovery rate is broadly in line with industry revenue recovery rate (fashion retailers). Revenue for Q3FY21 fell 28% YoY to | 237.9 crore (up 65% QoQ). Non-metro cities continue to recover at a swift pace with Tier I cities reaching 70% and Tier II, III cites recovering at ~80% of pre-Covid levels. Stores in metro cites are lagging behind with 55% recovery rate. Gross margins continued to stay under pressure (down 670 bps YoY to 61%)...

Post relaxation of lockdown restrictions, TCNS witnessed a healthy sequential recovery but sales continue to be below pre-Covid levels. Revenue recovery rate is on an upward trajectory with sales reaching 45% of pre-Covid levels in Q2FY21 and ~70% in October. Online sales continue to grow swiftly with October registering highest ever sales. Around 95% of the stores are operational as on end of Q2FY21. Emphasis on minimising cash burns are on track with TCNS securing full year rental savings of ~30% YoY, and potential annualised savings of 15-20% for employee expenses in...

As expected, Q1FY21 was a washout quarter for TCNS Clothing marred by store closures for a major period during the quarter. The main emphasis in Q1 was on sharp rationalisation of operating overhead. Revenue for the quarter fell 88% YoY to | 32.4 crore. For offline sales, normalcy levels reached 40% of pre-Covid sales with strong traction in e-commerce channel (1.3x of pre-Covid levels). Provision for dormancy on unsold inventory (~| 3 crore) and change in channel mix (higher share of e-commerce) led gross margins to contract to 50.7% vs. 67.2% in Q1FY20. In a bid to minimise cash...

Disruptions owing to store closures (from mid-March onwards) led to substantial contraction in revenues for TCNS Clothing in Q4FY20. Revenue for the quarter de-grew 25% YoY to | 219.2 crore. In B2C sales, TCNS reported SSSG of 4%+ in January-February while in March SSSG contracted materially by 57% YoY. As per management estimates, the company was unable to execute confirmed B2B orders worth | 44.0 crore and overall lost revenue worth | 103.0 crore in Q4FY20. Given March is a full priced season sale, loss of sales negatively impacted gross margins....

We believe we may be at the fag-end of top-line/WC pressure as MBO rationalization is nearly over. Margins are also set to improve FY21 onwards as TCNS 1. smartly re-negotiates rent bills and 2. Low base effect. While we cut our EBITDA estimates by 3-4% to factor in higher cost of retailing, we roll-forward our DCF to FY22 and hence, maintain our TP of Rs. 670/sh, implying 18x EV/EBITDA. Reiterate BUY. TCNS continues to reel under the pain of 1. Heightened competitive intensity as 1. Peers step up liquidation/promotion to reduce their working capital pangs (Per channel checks), 2. MBO sales continue to dip, 3. Selling & Distribution (S&D;) increases cost of retailing. However, we believe the worst may be behind the category leader as MBO rationalization is nearly over and product lines are getting better. The company has been adding relevant categories (Drape/bottom-wear) via brand Elleven and Footwear to better round its portfolio of offerings for women.

TCNS has reported below expected result for 2QFY20 led by overall moderation in growth across all retail channels. Revenue growth in online channel was impacted by one-off logistics related issues at the retailer's end while decline in MBO revenue was due to liquidity crisis faced by retailers. Channel expansion in LFS remains strong (added 112 doors). Most of the expansion in LFS was of the brand Aurelia. Based on current performance and management guidance we have revised our estimates downwards. However, with the likely launch of the 4rth co-ordinate brand (into bottow wear and drape wear) and penetration into new categories (ethnic wear for girls,...

We met the management of TCNS Clothing to gain an insight into the company's business outlook. TCNS is one of India's leading women's branded apparel company housing three popular home-grown brands, W', Aurelia' and Wishful'. Over the years, the company has established a strong foothold in the space whose core offering is ethnic apparel like kurtas, salwar kameez and fashion ethnic bottoms. It has built a robust distribution network, where products are sold through 505 exclusive...

TCNS Clothing Co Ltd (TCNS Clothing) is India's Leading Women's Branded Apparel Company in terms of total number of Exclusive Brand Outlets (EBOs) as of May 2018, according to Technopak. The company design, manufacture, market and retail a wide portfolio of women's branded apparel across multiple brands. The company sells their products across India and through multiple distribution channels. As of March 31, 2018, they sold their products through 465 EBOs, 1,469 Large Format Store Outlets and 1,522 Multi-Brand Outlets, located in 31 States and Union Territories in India. As of March 31, 2018, they also sold their products through 6 EBOs in Nepal, Mauritius and Sri Lanka. In addition, they sold their products through their own website and online retailers. Company's product portfolio includes top-wear, bottom-wear, drapes, combination-sets and accessories that caters...

Incorporated in 1997, Delhi based TCNS Clothing Co. Limited is India's leading women's branded apparel company in terms of the total number of exclusive brand outlets as of November 2017. The company designs, manufactures, markets, and retails a wide portfolio of women's branded apparel across multiple brands. It sells its products across India and through multiple distribution channels. As of September 30, 2017, the company sold its products through 418 exclusive brand outlets, 1,305 large format store outlets and 1,361 multi-brand outlets, located in 29 states and two union territories in India. It also sold its products through six exclusive brand outlets in Nepal, Mauritius, and Sri Lanka. In...

IPO Note - TCNS Clothing Co Ltd Issue Open: July 18 - June 20, 2018, Price Band: Rs. 714 - 716, Issue Size: 15,714,038 Equity Shares (Entirely Offer for sale by promoters and PE investor), Offer Size: Rs.1121.98 crs - 1125.12 crs

The company design, manufacture, market and retail a wide portfolio of women's branded apparel across multiple brands. The company sells their products across India and through multiple distribution channels. As of March 31, 2018, they sold their products through 465 Exclusive Brand outlets, Price Band 1,469 Large Format Store Outlets and 1,522 Multi-Brand Outlets, located in 31 States and Union Territories in India. Over the years, they have expanded their brand portfolio to 3 brands (W, Wishful Bid Lot...