Monte Carlo Fashions Ltd - Research Report


Private Client Research






Monte Carlo Fashions Ltd

Reco Price
Rs. 480
Price Target (1.5 - 2 Years)
Rs. 950


December 21, 2015
CNX Nifty




Superior brand recall coupled with strong distribution network and focus on non-sweater segment to new geographies will drive the future growth.

Leading Brand:
Monte Carlo is the flagship brand of the company (Oswals from Ludhiana) which is a market leader in the woollen knitted apparel industry in India and has been renowned as a ‘Superbrand’ for woollen knitted apparel in each edition of Consumer Super brands India since inception. Company has more than 85% market share in winter wear market for north eastern part of the country. Monte Carlo enjoys significant premium and brand recall on a pan India basis. Also, it has a strong distribution network comprising of 196 ‘Monte Carlo Exclusive Brand Outlets’ and over 1,300 Multi Brand Outlet (MBOs) through which its products are sold. As on date majority of the stores are in Punjab, Haryana, Bihar and UP and has a reasonable reach in Rajasthan and MP. Now company plans to enhance its presence in southern India by opening 2-3 more showrooms from the present 5 showrooms. On overall basis company opens around 25-30 showrooms every year and keep an asset light business model through franchise based outlets.

Wide range of products:
Company has wide range of products under their portfolio. ‘Platine’ is its premium range for Men, ‘Denim’ is exclusive range for Denim Apparel, ’Alpha’ is exclusive range for women & ‘Tweens’ is the exclusive range for Kids. The company continues to focus on premium and economy cotton knitted and women apparel products for attracting diversified customer base in country. The woollen product portfolio consists of sweaters and cardigans whereas, cotton knitted garments include track suits & T shirts.

Cotton Garments:
Company plans to shift towards non-cyclic segments such as cotton garments; it is able to penetrate markets such as West and South India, which it traditionally could not enter with its winter wear segment. Consequently, increased visibility and addition of new territories will augment the revenue growth for company. This segment, which mainly comprises of fashion apparels, will see growth on back of reach as well as overall growth in urban consumption. Company’s other new segments i.e. home furnishing (blankets) and kids apparel will continue to show huge growth on low base.

Manufacturing Facilities:
It has two manufacturing facilities in Ludhiana, Punjab, one for woolen apparel products and the other cotton apparel products. The manufacturing facilities include facilities for product development, a design studio and sampling infrastructure. Almost all woolen knitted products are manufactured in-house at its manufacturing facility. Also, it recently commenced in-house manufacturing of some of its cotton t-shirts and thermals in April 2014. For the remaining cotton and cotton-blended products, the company follows an asset-light model by outsourcing the production to a network of third-party manufacturers, also known as job work entities. Hence the company has very low Employee cost as % of sales compare to its peers.

Strong Business Model:
Company because of its leadership position in woolen segment is able to distribute on an outright sale basis to majority of the retailers. The company doesn’t carry inventory risk of obsolete & old fashioned apparels which helps them to keep check on their inventories for regular basis. Company is expecting to triple their revenue growth from the online channels as compared to last year. It has picked up well as compare to present as they are now available on more website as compared to the past. So, that is the reason that sale has picked up but the beauty is they have the same pricing policy on all the channels whether it is LFS, it is offline retail or online retail.Currently online sales is contributing only 2.5% of total sales.

Focus on Tweens & Kids segment:
Company aims to increase production and supply of apparel products in the “Tweens” range and also launch a dedicated marketing and branding exercise for kids wear products. The branded kids wear segment in India is under-penetrated and offers a compelling opportunity for growth. According to the Technopak Report, 2014, the kids apparel market contributes 20% to the total fashion market and is the fastest growing segment in the Indian market. Company wants to tap this market as they are looking for superior growth from this segment.

Strong Financials:
Company is a zero net debt company. Going forward, over next 2-3 years, Company has already incurred capex of Rs 182 crores in last two years, Hence we don’t expect much capex to be incurred in next three years barring maintenance capex of Rs 15 -20 crores per year. Also company is incurring high depreciation cost in last three years which has impacted PAT .Hence going forward we see depreciation cost getting stable and sales growth of more than Rs 100 crores for next two years.

Stock Data

CMP (Rs)
Face value (Rs)
52 Week Range (Rs)
381 - 602
Market cap (Rs Crores)
Price To Book Value (x)
P/E Ratio (x)

One Year indexed Stock Performance

Monte Carlo Fashions LtdSensex
Monte Carlo Fashions Ltd
Performance (%)


(in %)

+91 22 6639 3000



The domestic winter wear market of nearly $2.3 billion currently is growing at 9% CAGR. Going ahead, the segment is expected to grow at 7% and 12% in terms of volume and value, respectively, over 2012-17. The share of branded wool industry is about 12% of the total industry. (Source: Technopak Report, 2014). Company being a leading player in the largely unorganized Indian winter wear segment is well poised to capture the growth. In India, the winter wear market is clearly segmented between branded and unbranded players. The ratio is 70:30 with 70 per cent players being from the unbranded sector. The established domestic brands are trying to capture market share by innovating and introducing new lines every season. Innovative pricing and discount sales are helping them increase foot falls to their exclusive brand outlets. Most lifestyle apparel brands have exclusive range of winter wear for the specific months, but there are not many exclusive players in this segment. (Source: Technopak Report, 2014)


Monte Carlo Fashions Ltd is a leading apparel brand in India. It was launched in 1984 as an exclusive woolen brand by Oswal Woolen Mills Ltd (‘OWML’), one of its group companies. The company primarily caters to the premium and mid-premium branded apparel segment for men, women and kids, offering a comprehensive line of woolen, cotton and cotton-blended knitted and woven apparel and home furnishings through its ‘Monte Carlo Exclusive Brand Outlets’ and MBOs, including a network of national chain stores under the ‘Monte Carlo’ brand.

Profit & Loss Statement:- (Standalone)
(Rs Crores)
  • Net Sales
  • Growth (%)
  • Total Expenditure
  • EBIDTA Margin (%)
  • Other Income
  • Operating Profit
  • Interest
  • PBDT
  • Depreciation
  • Profit Before Tax
  • Provision for Tax
  • Tax Rate (%)
  • Profit After Tax
  • Margin (%)
  • Adjusted EPS
  • 373.01
  • -
  • 286.93
  • 86.08
  • 23.08
  • 3.23
  • 89.31
  • 6.53
  • 82.78
  • 5.95
  • 76.83
  • 24.91
  • 32.43
  • 51.92
  • 13.92
  • 27.53
  • 402.41
  • 7.88
  • 335.70
  • 66.71
  • 16.58
  • 12.05
  • 78.76
  • 3.68
  • 75.08
  • 6.82
  • 68.26
  • 22.32
  • 32.70
  • 45.94
  • 11.42
  • 21.14
  • 503.73
  • 25.18
  • 409.49
  • 94.24
  • 18.71
  • 15.16
  • 109.40
  • 9.32
  • 100.08
  • 16.21
  • 83.87
  • 28.49
  • 33.97
  • 55.38
  • 10.99
  • 25.48
  • 590.00
  • 17.13
  • 476.50
  • 113.50
  • 19.24
  • 17.50
  • 131.00
  • 15.50
  • 115.50
  • 25.50
  • 90.00
  • 27.05
  • 30.06
  • 62.95
  • 10.67
  • 28.97
  • 650.50
  • 10.25
  • 520.50
  • 130.00
  • 19.98
  • 17.50
  • 147.50
  • 15.50
  • 132.00
  • 26.50
  • 105.50
  • 34.50
  • 32.70
  • 71.00
  • 10.91
  • 32.67
  • 750.50
  • 15.37
  • 605.50
  • 145.00
  • 19.32
  • 17.50
  • 162.50
  • 15.50
  • 147.00
  • 27.50
  • 119.50
  • 39.50
  • 33.05
  • 80.00
  • 10.66
  • 36.81
Source: Stockaxis Research, Company Data


Company is expected to post an EPS of Rs 36.81 in FY17E. At the current market price of Rs 480, the share is trading at a P/E of 13.03x on FY17E. With strong brand image, strong distribution network, healthy balance sheet and widening product portfolio, the reasonable P/E of stock should be 25.80x FY2017E which indicates target price of Rs 950.



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