HDFC Securities highlighted that TCNS Clothing – which owns popular womenswear brands W and Aurelia – path to "pre-pandemic sales remains underwhelming."
The TCNS Clothing Analyst: Jay Gandhi-led analyst team at HDFC Securities maintained the ‘reduce' rating for the stock, cutting the price target to ₹440 from ₹500.
The TCNS Clothing Thesis: Analysts said that TCNS Clothing remains the worst-performing company within the apparel pack. It noted that the company's revenue declined 6.8% to ₹309 crore missing the brokerage firm's estimate of ₹ 340 crore. The company's net profit of ₹50 lakh missed the firm's ₹3.9 crore estimate by a wide margin.
The firm was also ‘surprised negatively' by the 34% drop in revenue from the company's Channel online channel at ₹36.7 crore. The brokerage firm noted that the channel is currently going through a business model transition from B2B to B2C.
In their research note, the firm said the company's dampened finances were partly due to certain peculiar category-specific factors and "aggravated by product line failure in W."
The analysts also feel that increasing competitive intensity from well-capitalised peers remains a concern for the company going forward.
Price Action: TCNS Clothing soared 12.98% to close at ₹500.15 on Friday.
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