25 Nov , 2021 By : Kanchan Joshi
Given its multi-distribution channel approach and robust supply chain infrastructure, TCNS clothing has emerged as the market leader in women’s ethnic space through its three popular home grown brands. TCNS Clothing share price has appreciated around 2.2 times, from Rs400 in April last year to hovering around Rs885 apiece in November 2021.
Brokerage and research firm ICICI Securities has a Buy recommendation on the multibagger stock with a target price (TP) of Rs1,120 per share (raised from earlier TP of Rs860) with a time frame of around twelve months.
Healthy store addition pipeline for FY22 with opening of 60 new stores on a net basis, continue scale up of its omni distribution channel with new business models through third party market place and creating ‘online-first’ product ranges, setting up a new integrated warehouse and higher focus on expanding network in tier III/IV cities mainly through franchisee led model to act as key triggers for future price performance, as per the brokerage.
Apart from TCNS, in its retail coverage, ICICI Securities also likes Aditya Birla Fashion (ABFRL) as it has charted out growth strategies to become a around $2.8 billion entity ( Rs21,000 crore) by FY26E, translating to 15 percent CAGR in FY20-25. The brokerage's Buy rating on Aditya Birla Fashion shares come with a target price of Rs350 per share.
TCNS follows an asset light business model, with production outsourced on a job work basis. This enables the company to generate high RoIC. The company has a healthy balance sheet with cash reserves worth Rs160 crore, the note highlighted.
“Undertaking category expansion (beyond its core ethnic wear) in a bid to tap opportunities across non-apparel categories. Foraying into make-up, colour cosmetics under brand ‘Aurelia’. Over longer term, the management aspires to achieve 20-25% contribution from non-apparel segment," ICICI Securities' note stated.
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