FDI boost for innerwear brands

Innerwear companies are likely to be the biggest beneficiaries of 100 per cent foreign direct investment (FDI) through automatic route, said analysts.

On Thursday, Page Industries shares gained 0.42 per cent to close at a whopping Rs 23,065.65 on BSE after the government announced 100 per cent FDI in single brand retail through automatic route. Rupa & Company shares also gained 0.78 per cent while Lux Industries shares gained 0.18 per cent.

Page Industries, Rupa & Company and Lux Industries — the dominant players among the innerwear brands — rewarded investors with huge returns over the last one year, three-year and five-year period, data provided by Capitaline showed. There are other innerwear makers like Dora and VIP, which are not listed.

Page Industries has given a last five-year return of 567.95 per cent as on January 11, while its market capitalisation stood at Rs 25,718.2 crore.

Earlier, dominated by regional and unorganised players in the last 10 years, some innerwear brands have seen a huge rise. The stock market listed players have seen phenomenal rise in their market return and market capitalisation.

Rupa & Company has given a five-year return of 242.35 per cent, though it is still a smaller company compared to Page Industries with a market capitalisation of Rs 3,844.2 crore. Lux Industries, a late entrant in the listed space, has given highest return in the last one-year period of 113.12 per cent and its market cap has surged ahead of Rupa at Rs 3,855.38 crore.

Lovable Lingerie, Ashapura Intimates Fashion and Womens Next Loungeries are some of the lingerie companies that are listed on the stock exchanges but they have not given as good return as the innerwear companies.

Kishore P Ostwal, chairman, CNI Research, said, “Page Industries today commands a premium because it has a very sound business model as well as manufacturing facilities and its ability to take advance money for supplies to be made.”

“Not all players are able to command that kind of premium,” Ostwal said, adding that so far Page Industries has been in men’s and women’s innerwear, but chances are high that it will soon go into the lingerie business by entering in a tie-up with a foreign brand like Arvind has done in men’s wear segment.

“Chances of success in lingerie business depend on design and it is difficult to compete with foreign companies because lingerie manufacturing requires high quality machinery and design is a very important part,” Ostwal added.

Also, there are several foreign brands like Victoria’s Secret from the US, Hanes, Fruits of the Loom and Wacol from Japan that are spreading fast as popular innerwear brands among Indian consumers.