ABOUT MAXWELL INDUSTRIES
Incorporated in 1991, Maxwell Industries is engaged in the manufacturing and marketing of inner-wear, for both men and women. Its flagship brand, ‘VIP’ enjoys a high brand recall value. The other brands include Frenchie, Feelings, Leader and Eminence. Maxwell has a strong geographic presence in the Western and Southern regions with processing units located in Gujarat, Tamil Nadu and Maharashtra.
| Current Price (BSE) (13 December, 2016) | Rs. 53.80 |
| Market capitalization ((13 December, 2016) | Rs. 355.50 Cr. |
| Face Value | Rs. 2 |
| BSE 52 week High | Rs. 74.25 |
| BSE 52 week Low | Rs. 29.20 |
Maxwell Industries Financial Performance
| Particulars (in Rs. Cr.) | 2014 | 2015 | 2016 |
| Income from operations | 258.75 | 261.60 | 195.14 |
| Operating Profit | 24.27 | 28.34 | 0.12 |
| PAT | 5.33 | 6.99 | -9.93 |
| EPS | 0.73 | 1.08 | -1.50 |
| Equity Share Capital | 24.46 | 16.57 | 13.22 |
| Net Worth | 102.77 | 99.42 | 93.33 |
| Total Debt | – | – | – |
| Operating Profit Margin (In %) | 8.06 | 8.97 | -2.45 |
| Net Profit Margin (In %) | 2.06 | 2.67 | -5.10 |
| ROCE (In %) | 4.46 | 6.03 | -9.00 |
| ROE (In %) | 5.85 | 7.32 | -10.64 |
| Current Ratio | 1.28 | 1.23 | 1.31 |
The Company operates with ZERO DEBT. The Company has been a consistent dividend payer and has registered a net loss for the first time in a decade for FY 2016. For FY 2016, the Company has reduced its focus on low margin products which has resulted in a 25% fall in sale. The basic reason for drop in EBIDTA is on account of higher spending on advertisements during FY 2015-16 as compared to the previous financial year.
Growing Innerwear Market
Market Overview – Indian Innerwear market
As of November 2016, the size of the Indian Innerwear market is Rs. 15,870 Cr. (8.1% of total Indian apparel market). The segment is also growing at an impressive CAGR of 12% and is expected to reach Rs. 27,900 Cr. (USD 4.6 billion) by 2020 led by favorable demographic and income factors as well as higher propensity of consumers to use branded products. On the basis of pricing, this market is further subdivided into super premium, premium, medium, and economy segments.
The Men’s Innerwear Market Size is Rs. 6,330 Cr. Many fashion/apparel companies have extended their presence to men’s innerwear segment. Product recall of companies with focus solely on innerwear products is comparatively higher. The Women’s Innerwear Market Size is Rs. 9,540 Cr., this is one of the fastest growing categories within women’s apparel. This category is growing at a CAGR of 14%, and is expected to reach Rs. 18,380 Cr. (U.S. $ 3.06 billion) by 2020.
The market is characterized by a large unorganized segment, but favorable macro factors like rising incomes, demographics, urbanization, and a increasing proportion of working women are driving the shift toward organized branded innerwear segment. From being considered as an essential commodity, the innerwear category is increasingly witnessing a shift from being a functional to a fashion category and a price-sensitive to a brand-sensitive category.
Positioning of major brands in India
Diversified Brand Portfolio to Augment Market Share
Maxwell has well-known brands like ‘VIP’, ‘VIP Frenchie’, ‘Frenchie ’, ‘VIP Feelings’, ‘Leader’ and French brand ‘Eminence’.
| BRAND | SEGMENT | CATEGORIES | REVENUE CONTRIBUTION |
| VIP | Men | Vests, Briefs, Trunks, Boys, Lounge Wear, Socks | 47% |
| Leader | Men and Women | Briefs, Panties, Vests, Trunks | 12% |
| Frenchie | Men – Youth | Briefs, Trunk, Vests, Outerwear, Junior | 25% |
| Feelings | Women | Bra, Lounge Wear, Socks, Panties, Camisoles | 14% |
| Eminence | Men | Briefs, Trunks, Vests, Boxers, Tees | 2% |
Over the years, Maxwell Industries has widened its portfolio offerings by consistently foraying into adjacent unorganized segments (e.g. leisurewear and sportswear). The Company has also acquired Eminence S.A. in 2010 to have its presence in premium men’s innerwear segment. Presently, the demographic mix of Maxwell revenues is 90% male and 10% of the female population. In the coming years, the Company is looking to change this mix to 75% male and 25% female, which would be a significant move in the women segment.
| VIP is positioned as an value brand at an affordable price | |
| Rs. /piece | |
| Euro (Rupa) | 80-150 |
| Macroman (Rupa) | 125-170 |
| Lux | 140-165 |
| Hanes (Arvind) | 145-210 |
| VIP Frenchie X (Maxwell) | 150-200 |
| Jockey (Page) | 179-300 |
| Chromozome | 165-239 |
| US Polo (Arvind) | 239-269 |
| Calvin Klein | 799-2699 |
Strong Retail Footprint Covering 110,000 Stores
Maxwell has extensive wholesale distribution network of 550 dealers and 110,000 retail outlets. However, the Company is looking at opening retail format stores largely on franchisee model to do the much-required brand attention and consumer perception for different brands.
WHAT’S DRAGGING THE STOCK
No New Product Launches
Main Competitor: Page Industries (JOCKEY)
Page Industries is way ahead of its listed peers in size and return ratios. Page Industries operates in the premium and mid-premium innerwear segment. Lovable Lingerie, its closest listed peer, operates in the economy and mid-premium segment. The other listed entities primarily operate in the low/economy segment.
Over the past five years (FY 2011 to FY 2016), Page Industries recorded a revenue CAGR of 20.59% vs. 7.73% for Lovable Lingerie, 11.44% for Lux Industries, 7.43% for Rupa and 3.47% for Maxwell Industries (VIP).
Peer Comparison
| Company | Last Price | Market Cap. | Sales | Net Profit |
| Page Industries | 13,760.45 | 15,348.23 | 1,783.43 | 232.66 |
| Rupa and Company | 260 | 2,067.64 | 1,018.61 | 65.93 |
| Lux Industries | 744.65 | 1,880.46 | 941.16 | 51.34 |
| Ashapura Intima | 410 | 798.16 | 186.6 | 12.38 |
| Lovable Lingeri | 246.8 | 414.62 | 196.77 | 23.18 |
| Maxwell Ind | 57.35 | 378.95 | 194.57 | -9.93 |
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