MUMBAI: Lovable Lingerie is the third best-performing stock among public companies this year, doubling in value as traders bet it could replicate the performance of Jockey innerwear sellers Page Industries.
It won a third in about a week. But the small float and low delivery volumes are a warning against betting for some who fear it has risen above its fundamentals, while many other newly listed companies are trading below their selling price.
“The rally in Lovable Lingerie is more of a momentum game with hardly any genuine interest,” said Sharad Rathi, associate director at
“Valuations seem a bit out of tune.” Lovable, which sold shares for Rs 205 each, rose 109% to Rs 428.5 on Friday after hitting a high of Rs 462.50. Some of the top shareholders include HDFC Mutual Fund, SBI Funds, UTI Asset Management and Fidelity, the filings show.
The total number of outstanding shares of the company is 1.68 crore and the public holding is about 50 lakh shares. The Sensex fell 2.6% during the period and the BSE IPO index rose 1.6%. and C Mahendra Exports are the two companies that have bounced back more than Lovable, under this year’s IPOs.
The stock is trading at 31 times projected earnings for fiscal 2012, compared to Page Industries’ 27 times earnings. While the stock has been among the best-traded stocks in recent days, gaining limits on some days, the number of stocks that changed had been negligible. The number of shares that actually changed hands was in single digits for days.
The delivery ratio was 2% to 9% between June 10 and 17, when the stock rose 33% on BSE, exchange data shows. This follows the performance of Page Industries, which has gained 396% since its IPO in March 2007. Shares sold for Rs 396 each are trading at Rs 1,784. “Rising disposable incomes and growing awareness about personal hygiene are fueling the growth of the inner garment market in India,” said Anand Rathi Secutities in a recent report.
“This growth is also boosted by the emergence of modern commercial centers, shopping complexes etc.”, the brokerage said with a target price of Rs 430.
The Rs 93 crore IPO of the Mumbai-based company received good response, reaching 21.8 times the institutional share, 98.5 times among high net worth individuals and 20.5 times in the retail category. Rising commodity prices and intensifying competition are the two risks to earnings growth, the report said.
This post The Lovable Lingerie Dream Continues As Merchants Pick It Up
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