The shares of TCNS clothing appreciated to the tune of 9.55 % on Tuesday to reach an intraday high of ₹ 623.70 apiece. This happened after Aditya Birla Fashion (ABF) became the frontrunner to acquire a promoter stake in the company. Once everything is said and done, this might become one of the largest acquisitions of the conglomerate.
TCNS Clothing Co. Ltd, incorporated in 1997 is a leading exclusive women’s ethnic/fusion apparel company. Some of its major brands include Wishful, W, Aurelia and Elleven. Its shares were trading at ₹ 604.90 apiece at 12:25 PM.
Reliance Retail, Aditya Birla Fashion, Trent, Nykaa and other private equity investors like TPG and Advent were eyeing a stake in buying around a 29% stake in TCNS clothing. Reports suggest that the development might also result in the promoters paring their entire or partial 32% stake in the company.
The Pasricha family of New Delhi, who are the promoters of the company and private equity investor TA Associates collectively hold a 61.24% stake in the company.
Credit Suisse was given the task of locating a financial or strategic acquirer. An open offer for an additional 25% of the company will also be made as a result of the acquisition. The new investor might purchase up to 86.24% of TCNS for ₹ 3,016 crores if the open offer is completely accepted.
Reports suggest that the promoters’ demand for a sizable control premium is holding up the ongoing negotiations. They said that disagreements over valuations can potentially be a deal-breaker.
TCNS Clothing Co Ltd is a small-cap company with a market capitalization of ₹ 3,509 crores. Its shares were trading at a price-to-equity ratio of 118.99 as compared to the industry P/E of 72.24. This suggests that the stock is overvalued as compared to its peers. The company has an ideal debt-to-equity ratio of 0.76 and earnings per share of ₹ 4.78.
Written by Simran Bafna
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