In this article, we will explore TCNS Clothing Co. Ltd. fundamentally, understand its business model and industry, and determine whether it’s a good investment fit for you.
TCNS Clothing Co. Ltd.
TCNS Clothing Co. Ltd. (TCNS) is a leading Indian apparel company with a wide brand portfolio and a strong presence in the women’s wear segment. Founded in 1988, the company has established itself as a prominent player in the Indian fashion industry, catering to a wide range of consumers through its diversified brands.
With over 1,700 points of sale spread across 650 cities in India, today, TCNS has established a formidable retail presence, and ensured that its stylish creations are within reach of women nationwide.
The company has also won numerous awards and accolades for its outstanding contributions to the Indian fashion industry. These include:
- “The Economic Times Award for India’s Most Promising Brands in Fashion”
- “Businessworld’s Most Valuable Companies in Fashion”
- “India Fashion Awards for Best Fashion Retailer”
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Is the textile industry a good sector to invest in?
India’s textile industry, a cornerstone of the nation’s economy, stands as a lucrative investment opportunity in 2023. With a projected CAGR of around 10%, the industry is fueled by factors such as high demand and an ever-growing need for more variety in clothing. India’s position as the second-largest producer of cotton and textiles globally certainly gives the industry an advantage. Its annual textile consumption is over 11 billion metres, and the country has set a target of achieving $400 billion in textile exports by 2025.
Although this industry might seem like an opportunity, we urge investors to consider the challenges faced, including intense competition, fluctuating raw material prices, and stringent regulatory requirements.
India’s rich heritage of handloom and handicraft textiles also holds potential for investors looking to capitalise on the growing demand for authentic and traditional products, both domestically and internationally.
Who are TCNSBRANDS’s competitors in the textiles sector?
Here are some of TCNSBRANDS’s competitors:
- Page Industries Ltd.
- Safari Industries (India) Ltd.
- Raymond Ltd.
- VIP Industries Ltd.
- Jindal Worldwide
- Trident
History of TCNS Clothing Co. Ltd.
Emerging from humble beginnings in 1988, TCNS Clothing Co. Ltd. (TCNS) has transformed into a prominent player in India’s women’s wear market. Under the leadership of Osang Tantia and Arvind Singhal, TCNS has consistently expanded its brand portfolio in recent years, from the flagship W brand to value-for-money DressBerry and youth-oriented Sherrin.
TCNS has also made several strategic acquisitions along the way, such as Peninsular Capital Markets in 1997, which bolstered its financial capabilities. The company’s foray into e-commerce in 2006 and its subsequent omnichannel strategy in 2019 have shown investors that it can work hard and succeed in adapting to evolving retail trends.
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Investing in TCNSBRANDS
Pros
- The company has 50+ in-house design teams developing over 5000 styles every year.
- It has 675 exclusive brand outlets (revenue contribution 42% as of Q1FY24), 2300 large format stores (39%), and 1,100 multi-brand outlets.
- It has 150+ suppliers across India for fabric/trims and garment manufacturing.
- Promoter holding in the company has also significantly increased by 29.6% over last quarter.
Cons
- The stock might be overvalued since it currently trades at more than 5 times its book value.
- There might be concerns that the company might be unable to cover its interest expenses due to a low coverage ratio.
- Sales growth over the last 3 years has been poor at 3.8%.
- Return on equity numbers have been negative for the last 3 years, which indicates negative net income.
The finances
| Metric | Value |
|---|---|
| Market cap | ₹2,456 cr |
| Book value | ₹72 |
| Dividend Yield | 0% |
| ROCE | 1.72% |
| ROE | -3.17% |
| Face value | ₹2.00 |
Shareholding pattern of Titan Ltd.
Here’s the shareholding pattern of Titan:
- Promoters: 61.05%
- Foreign Institutional Investors (FIIs): 5.32%
- Domestic Institutional Investors (DIIs): 2.53%
- Public: 31.09%
Promoter holding has significantly increased over the past few months, from 30% to more than 61%! Mutual funds’ holdings in the company, at the same time, have dramatically decreased since June of last year, falling from 4.47% to 1.25%. In March this year, FIIs also sharply decreased their share in the company from a little more than 16% to 5.3%.
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Peer multiple comparison
| Stock | P/E Ratio | P/B Ratio | Div. Yield |
| TCNS Clothing Co Ltd | -138.92 | 3.99 | – |
| Page Industries Ltd | 73.79 | 30.74 | 0.66% |
| Safari Industries (India) Ltd | 83.88 | 24.64 | 0.08% |
| Raymond Ltd | 19.66 | 3.49 | 0.19% |
A negative P/E number means that the company earned a negative net income number recently, which could be due to a variety of reasons. This could be corrected in the near future. P/B ratio seems deflated compared to some companies, and dividend yield numbers aren’t available right now. Not very much can be derived from simply looking at these multiples and further analysis and research into valuation metrics is warranted in this case.
Conclusion
So, that’s a brief overview of everything you need to know about TCNS Clothing Co. Ltd. before investing. However, this information is not exhaustive, and we encourage you to do your own research before investing.
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