Mufti Menswear IPO Financial Analysis

Credo Brands, commonly known as Mufti, is set to launch its IPO on December 19, 2023. Here's a summary of the company's business model, strengths, weaknesses, and growth prospects to assist investors in making informed decisions.

Credo Brands (MUFTI) IPO Overview

Credo Brands Marketing Ltd, is known for its MUFTI apparel brand. Started over three decades ago by Kamal Khushlani, MUFTI aimed to break away from traditional formal wear, offering a unique and vibrant clothing line for the evolving Indian market. Today, MUFTI has become a nationwide brand, emphasizing individual expression and refined style.

The company focuses on design and manufacturing, reaching customers through a network of over 1750 outlets, including Exclusive Brand Outlets (EBOs) and multi-brand outlets (MBOs). MUFTI has a strong market presence, with annual sourcing of over 4 million units. The product range spans various categories, catering to diverse moods rather than specific occasions.

Credo Brands (MUFTI) IPO Strengths

1. The company holds a strong position in India's mid-premium and premium men's casual wear market, ranking among the largest homegrown brands based on market share as of FY22.

2. The company has a pan-India presence through 1,773 touchpoints, consisting of 379 Exclusive Brand Outlets (EBOs), 89 Large Format Stores (LFS), and 1,305 Multi-Brand Outlets (MBOs), with its reach extending from major metros to tier-3 cities.

3. Credo Brands serves as a wardrobe solutions provider for various occasions in customers' lives. It outsources manufacturing operations but handles all design aspects internally.

4. Experienced Promoter and senior management team.

Credo Brands (MUFTI) IPO Risk

1. All products are sold under the single brand 'Mufti'. If there are challenges in effectively marketing these products, it may impact consumer interest and, in turn, negatively affect the business.

2. The company depends on third-party manufacturing partners to produce its finished products, and there are no exclusive agreements in place.

3. The company competes in competitive markets, both offline and online, across its product segments. Failing to compete effectively could harm the business.

4. The company heavily depends on traditional retail outlets, with a substantial portion of its revenue coming from offline channels. In FY23, just 5.1% of the revenue was generated through online channels. This trend continued from FY22 and FY21, where digital sales constituted only 8.2% of the total revenue.
Credo Brands (MUFTI) IPO Details
Credo Brands (MUFTI) IPO is scheduled from December 19 to December 21, 2023. The stock has a face value of ₹2 per share, and the IPO's price range is ₹266-280 per share.

Financial Performance of Credo Brands (MUFTI) IPO

Over the past three years, Mufti has shown improvement in its profit after tax. In 2021, it was 9.26 crore, followed by an increase to 33.75 crore in 2022, and a sustained growth to 77.45 crore in 2023.

In Cr

Key Ratios

Over the past three fiscal years, the company has shown improvement in return on equity (ROE) and return on capital employed (ROCE). In FY23, ROE is at 30%, an increase from 16.7% in FY22 and 1.8% in FY21. Similarly, ROCE has improved to 28.2% in FY23, up from 17.3% in FY22 and 5.9% in FY21. These ratios reflect enhanced efficiency in generating returns for shareholders and utilizing capital effectively, indicating positive financial growth and performance for the company.

Financial Performance of Credo Brands (MUFTI) Vs Peers

Credo Brands Marketing, with an FV of ₹2 per share, stands out among its peers with a strong Return on Net Worth (RoNW) of 29.98%, a favorable P/E ratio of 23.22, and an impressive EPS (Basic) of ₹12.06. In comparison, Go Fashion (India) Limited has a P/E of 88.24, and Arvind Fashions Limited has a P/E of 157.08. These financial metrics highlight Credo Brands' competitive positioning and favorable valuation in the market.

Promoters of Credo Brands (MUFTI)

1. Kamal Khushlani
2. Poonam Khushlani.

Before the IPO, the promoter held 66.66% of the company's shares. After the IPO, the post-issue promoter shareholding will be 53.66%, reflecting the changes in ownership structure due to the issuance of new shares through the initial public offering.

Final Words

This article takes a closer look at the Credo Brands (MUFTI) IPO, which is open for subscription starting December 19, 2023. It advises investors to carefully examine the company's information, financials, subscription status, and the Grey Market Premium (GMP). The GMP provides a sense of the expected listing performance, offering valuable insights for investors to make informed decisions.