Kizi Apparels Limited

Kizi Apparels Limited is engaged in manufacturing and trading of readymade garments through the own Showrooms, distributors and malls and online platform.  Company has launched first its own brand 'ANUTARRA' in the women's ethnic wear segment in 2019, they have listed the products on most of the available E-commerce platforms in the F.Y. 2019-20. In 2020 they collaborated with Reliance Retail & scaled up the business to a new height. During Covid-19 period, their doors were opened for new businesses and we grew in terms of business volume. In the year 2021, they became one regular manufactures of Reliance Retail. They have executed an Agreement and Non-Disclosure Agreement (NDA) with Reliance Retails Limited, Mumbai, on May 30, 2023 for a term of three years. In 2021, they have launched the women western wear brand by the name of “KIZI”.  In the year 2022, they have entered into distribution and wholesale network with the brands and consequently the sales increased to three times. This has helped them to captured the sizable share in the market for the Brands. They have also executed Products Supply agreement with M/s. Absolute Brands and Retails Private Limited (ABRPS), Banglore, for the supply of their products to the ABRPS on outright basis and ABRPS in turn sell the said products through its retail chain of store and through their E- Commerce Channel in India to the end customers. They have executed agreement for the supply of women wears which includes western wears and ethnic wears.   Similarly, they have entered in to an Agreement with M/s. Fab India Limited (FIL), New Delhi, vide Vendor Agreement (to Manufacture and Supply) dated June 21, 2023 for manufacturing of Branded products for FIL on Job Work basis under the brand name of 'Fab India'. As per financial performance, Kizi Apparels Limited has posted total income / net profits of Rs 5.39 Cr / Rs 0.20 Cr (FY22), Rs 15.49 Cr / Rs 0.54 Cr (FY23) and Rs 20.27 Cr / Rs 0.72 Cr (FY24). So as per previous financials data, company has shown good growth, but net-profit margin is very low. Also net cash-flow is negative. Company has posted an average EPS of Rs 1.12 and average RoNW of 11.81% for last three fiscals. Issue is priced at a P/BV of 1.43 as per NAV of 14.65 as on Post issue. If we attribute latest earnings of FY22, FY23 and FY24 on fully diluted equity post issue, then asking price is at a P/E of around 79.56, 29.87 and 22.74 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Beeline Capital Advisors Private Limited is associated with this SME IPO and handled 16 SME IPOs in last 3 years. From last 10 SME IPOs, three opened below issue price and remaining above or at par on the day of listing. As of now from last 10 SME IPOs, five are trading below issue price and remaining above issue price. ( As on 27.07.24 ) As per financials, Kizi Apparels Limited has shown good growth, RoNW is 12.29% and P/E is respectively 79.56, 29.87 and 22.74 as per FY22, FY23 and FY24 earnings. So, issue looks fully priced, but very low net-profit margin and negative cash flow raises doubts. Company is engaged in manufacturing and trading of ready made garments, which is highly fragmented and competitive business segment. Performance of BRLM is average. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Abhishek Nathani
• 2 Kiran Nathani