Lorenzini Apparels Limited designs, manufactures, and markets ready-made garments in India. It offers formal, semi-formal, and casual wear for men and women under the Monteil brand name. The company serves customers through retail outlets and e-commerce channels. Lorenzini Apparels Limited was incorporated in 2007 and is based in New Delhi, India.

India

Lorenzini Apparels Limited

Consumer Cyclical

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

LAL.BO reported revenue of INR 595mn in the last 12 months, up 8% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 113% from FY23 to INR 0.75.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 58ppts over six months and grown 2ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is slightly negative.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 29.7% in the last 12 months, up from 22.3% in FY23. 

Historically, LAL.BO has reported strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 21.4%, a growth from 10.0% in FY23. 

Lorenzini Apparels Limited reported a return on equity (RoE) of 31.1% in the last 12 months, up from 26.7% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 16.7% in the last 12 months, an increase from 10.6% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 27.1%, above the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.9 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

LAL.BO has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is very unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, robust profitability, solid return on capital, strong debt servicing capacity, and adequate interest coverage, among the positive credit factors. Among the negative credit factors and we point to weak positions in its industry, poor working capital management.

In highly turbulent market conditions, LAL.BO is volatile. In other words, the stock will fall much more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be large. 

In normal market circumstances, LAL.BO is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from significant to substantial. We would also like to highlight the substantial intraday volatility of the instrument. 

Considering past and projected metrics, the stock is 'expensive' compared to its peers. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITDA, overpriced on P/FCF. 

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Lorenzini Apparels Limited

₹ 12.85

3

Lorenzini Apparels Limited

₹ 12.85

3

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₹ 12.85

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