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Monte Carlo Fashions Ltd. (MCFL) is one of the leading apparel brands in India which primarily caters to the premium and mid-premium branded apparel segment for men, women and kids. The company offers a comprehensive line of woollen, cotton and cotton-blended knitted and woven apparel and home furnishings under the Monte Carlo brand. The companys net sales have grown at a CAGR of 16.3% over FY2012 to FY2014. Although, the EBIDTA margins have declined from 22% in FY2012 to 18.7% in FY2014, we believe they are at sustainable levels. The net profit has grown at a CAGR of 5.8% over FY2012-FY2014. At the lower end of the price band, the stock is valued at ~24.8x PE on FY2014 earnings which we believe is fair considering its i) strong brand image, ii) strong distribution network, iii) healthy balance sheet and iv) widening product portfolio. We recommend Subscribe to the issue at the lower end of the price band from a two-year perspective. From a one-year perspective, we see limited upside potential as valuations seem to be fair.Download Full Report