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IPO review: Why SP Apparels is not exciting

Although earnings will get a fillip from lower interest costs, the company lags peers on profitability

Sheetal Agarwal  |  Mumbai 

The business model of SP Apparels, which is engaged in manufacturing and exporting of knitted garments for kids, is similar to that of listed peer Kitex Garments. While the revenues of both companies are more or less similar, there is a huge difference in their margin profiles.

In FY16, for instance, SP Apparels’ earnings before interest, taxes, depreciation and amortisation (Ebitda) and net profit margins stood at 16.8 per cent and 6.5 per cent, respectively – less than half of Kitex Garments’ figures which stood at 34.1 per cent and 20.5 per cent. The margins of the two ...

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First Published: Tue, August 02 2016. 22:46 IST