Le Merite Exports Limited IPO

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(i) Le Merite Exports is an ISO 9001:2015 certified company engaged in manufacturing and trading of textile products namely cotton yarn, greige fabric and finished fabric for domestic and export sales. We deal in diversified product portfolio with capability to supply compact cotton yarn varying from counts NE 16/1 to NE 32/1 & NE 16/2 to NE 32/2 combed carded & double yarn that are used in various forms and for varied end uses.

(ii) The Company have incorporated two (2) subsidiary companies for diversification into noncotton yarn products.

a) Le Merite Filament Private Limited
The Company holds 51% of the equity capital of Le Merite Filament Private Limited incorporated on October 08, 2021, to diversify into business of trading in polyester yarn, viscose yarn, synthetic fibers, staple fibers, worsted yarn, lycra yarn and such other varieties whether texturized, twisted, sized, dyed or otherwise and other such kinds of fiber. Le Merite Filament Private Limited is yet to start its business activities.

b) Le Merite Laxmi Spinning Private Limited
The Company holds 51% of the equity capital of Le Merite Laxmi Spinning Private Limited incorporated on December 15, 2021, to diversify into business of trading in polyester yarn, viscose yarn, synthetic fibers, staple fibers, worsted yarn, lycra yarn and such other varieties whether texturized, twisted, sized, dyed or otherwise and other such kinds of fiber. Le Merite Laxmi Spinning Private Limited is yet to start its business activities.

(iii) Le Merite  business is divided into three separate yarn business verticals, consisting of a) manufacturing of yarn, b) trading of yarn, and c) trading of greige and finished fabrics.

42% they earn from manufacturing, 44% they earn from trading of yarn and 14% they earn from Trading of Greige and Finished Fabrics.

(iv) Competitive Strengths:

a) Experienced management team with a proven track record and dedicated employee base.

b) Low Capex operational model.

c) Long standing association with low customer concentration.

d) Deep knowledge and understanding of optimal product assortment.

e) Strong supplier network.

f) Diversification into Organic and Sustainable Eco-Friendly Textiles.

(v) 86% of the revenue of the company comes from Exports. And, out of that 70% export goes to China, Bangladesh, Turkey and Iran.

Objects of the Le Merite Exports Limited IPO:

The Company proposes to utilize the Net Proceeds from the issue towards the following objects: 1. Meeting incremental working capital requirements; and 2. General corporate purposes
DRHP of Le Merite Exports Limited IPO

Le Merite Exports Limited IPO Details:

Open Date: Apr 25 2022
Close Date: Apr 28 2022
Total Shares: 6,400,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue IPO
Issue Size: 48 Cr.
Lot Size: 1600 Shares
Issue Price: ₹ 75 Per Equity Share
Listing At: NSE Emerge
Listing Date: May 09 2022

Promoters And Management:

1. Abhishek Lath is the Promoter and Managing Director and CFO of our Company He has been on the board of our company since August 2004 and his key responsibilities in the company includes in augmenting relationships with various stakeholders which has helped our Company expand and grow the business by increasing its product portfolio, global foot print and customer base on a continuous basis. He also looks after Finance and accounts, International Sales and marketing and is instrumental in generating business from various parts of the world. He possesses a degree of Business Administration from Navi Mumbai. After completion of MBA, he joined in the business of Yarn Manufacturing and Trading in the name of Le Merite Exports Private Limited. He has over 15 years of experience in the textile industry. He has played a pivotal role in the growth and development of the Company. 2. Umashankar Lath is the Promoter and Chairman and Managing Director of our Company. He has been on the board of our company since January 2012 has a vast experience in the field of yarns and fabrics. He started his business as a trader of yarns in Burhanpur at a very early age. Subsequently, he became exclusive agent/trader to sell yarns for big spinning mills of that time like “RSR Mohata mills, Gima Tex, Pee-Vee Textile Limited, NTC Mills etc.” He then was looking after weaving factory and also started getting yarn spinning from spinners on a job work basis in the year 1990 to 2003. 3. Sweta Lath is an Executive Director of our Company. She has been on the board of our company since November 2021 and her key responsibilities in the company includes after Human Resource and administration and new product development in the Company. She is having experience of more than 10 years in the business as woman entrepreneur and is very keen and open for new ideas and products. She possesses a degree of Bachelor of Science from Gujarat University.

Financials of Le Merite Exports Limited IPO:

Particulars (in Lakhs) March-21 March-20 Mar 19
Revenue 26,839.37 21,666.72 18,001.20
Purchase of Stock in Trade 24,384.33 19,656.02 16,347.34
Changes in inventories -734.69 47.34 220.97
Employee Benefit Expenses 277.29 248.09 173.9
Other Expense 1,868.70 1,077.51 822.29
Operating profit 1,043.74 637.76 436.70
OPM % 3.89% 2.94% 2.43%
Finance Cost 165 252.42 349.15
Depriciation 16.39 15.50 19.42
Other Income 74 61.28 92.1
Profit Before tax 936.33 431.06 160.25
Tax Expense 230 115.7 46.99
Profit After Tax 705.65 314.60 112.83

Comparison With Peers:

Name of the company CMP EPS P/E RONW (%)
Le Merite Exports Limited 75 2.85 26.31 28.99
Ambika Cotton Mills Ltd (standalone) 2315 118 19.62 16.00%
Pashupati Cotspin Ltd. (standalone) 130 3.8 34.2 7.10%
Shiva Texyarn Ltd. (standalone) 229 9.47 27.88 9.93%
Sambandam Spinning Mills Ltd 251 19 13.211 7.90%
Precot Ltd. 331 27.46 12.45 9.64%
KPR Mills Ltd. 655 14.98 43.72496662 21.92%
Note: Price of 21.04.2022 is taken and financial data of FY21 is taken for comparison.

Recommendation on Le Merite Exports Limited IPO:

Review and Recommendation of Le Merite Exports Limited IPO by InvestorZone is 5/10 1. Company has shown excellent growth in Revenue. Revenue has increased from 180 Crores in FY19 to 260 Crores in FY21. The first 6MFY22 are even good, they have done business of 213 Crores so far. 2. If we annualise 6MFY22 results, we will get total revenue of ~400 Crores and total PAT of ~22 Crores. 3. With ~2.5 Crores shares outstanding after IPO, EPS would be 9.01 and P/E at 8.32x. Based on FY21 results, the P/E would be 26x. So, with both the results, the IPO is overvalued. Generally, yarn companies get P/E less than 10. 4. D/E is more than 2.45, which will be reduced after IPO as they are raising funds for working capital management. Currently, short-term loan is ~88 Crores. 5. Company has excellent RONW of ~27% which is superior to its peers.

Lead Manager of Le Merite Exports Limited IPO:

  1. Fedex Securities Limited

Registrar of Le Merite Exports Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Le Merite Exports Limited C B1-104D, Boomerang, Chandivali Farm Road, Powai, Andheri (East), Mumbai - 400072 Phone: +022 28579209 Email: compliance@lemeriteexports.com Website: http://www.lemeriteexports.com/

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