Review By on September 25, 2018
• BBTCL is in the corrugated box and sheet manufacturing business.
• This segment is highly competitive with many players.
• Financial data in offer documents has some mismatch.
• FY18 top and bottom line spurt raises eyebrows.
• Issue is fully priced on given parameters.
ABOUT COMPANY:
B&B Triplewall Containers Ltd. (BBTCL) is engaged in manufacturing of corrugated boxes and corrugated sheets. The company is headquartered at Bangalore and manufacturing facilities situated at Bangalore and Tamilnadu. The manufacturing facility is divided into 2 units; both the units are engaged in manufacturing of corrugated sheets and boxes. It mainly caters to packaging industry and has been able to develop a loyal clientele network consisting of various packaging companies and MNC’s. Currently it is operating in domestic markets with r products being supplied on PAN India basis, but majority revenue is from the state of Karnataka.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans for repayment of loans (Rs. 8.30 cr.), working capital and general corpus fund needs, BBTCL is coming out with a maiden IPO of 5553000 equity shares of Rs. 10 each at a fixed price of Rs. 36 per share to mobilize Rs. 19.99 cr. Issue opens for subscription on 28.09.18 and will close on 05.10.18. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 27.07% of the post issue paid up capital of the company. Issue is solely lead managed by Gretex Corporate Services Pvt. Ltd. while Purva Sharegistry (India) Pvt. Ltd. is the registrar to the issue.
Having raised initial equity at par, it raised further equity in the price range of Rs. 40 to Rs. 190 per share (on the basis of Rs. 10 FV) between March 2012 and May 2016. It has also issued bonus shares in the ratio of 3 for 1 in May 2018. Average cost of acquisition of shares by the promotes is Rs. 1.44, Rs. 1.63, Rs. 2.63, Rs. 2.90, Rs. 6.07, Rs. 6.75 and Rs. 47.50 per share. Post issue, BBTCL’s current paid up equity capital of Rs. 14.96 cr. will stand enhanced to Rs. 20.51 cr.
FINANCIAL PERFORMANCE:
On performance front, for last four fiscals, BBTCL has posted turnover/net profits of Rs. 45.04 cr. / Rs. 1.28 cr. (FY15), Rs. 101.76 cr. / Rs. 1.93 cr. (FY16), Rs. 101.95 cr. / Rs. 1.67 cr. (FY17) and Rs. 166.97 cr. / Rs. 4.57 cr. (FY18). Sudden jump in top and bottom lines for FY18 raises eyebrows. According to information, this is result of hike in capacities and its utilization. For last three fiscals, BBTCL has posted an average EPS of Rs. 38.29 and an average RoNW of 15.31%. Issue is priced at a P/BV of 0.59 based on its NAV of Rs. 61.13 as on 31.03.18. (??? – There appears to be some mismatch on NAV calculations. Ref. offer document page nos. 93 and 94) If we consider FY18 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 16 plus. Thus issue is aggressively priced.
PEERS COMPARISION:
As per offer documents, it has shown Worth Peripherals as its listed peers (though not strictly comparable) that is currently trading at a P/E of around 15 (as on 25.09.18).
MERCHANT BANKER’S TRACK RECORD:
On merchant banker’s front, this is 16th mandate from its stable in last three years. Out of last 10 listings, 1 opened at discount, 3 at par and the rest with a premium ranging from 1.32% to 8% on the day of listing.
There appears to be some mismatch in offer documents on Pre-Post bonus EPS and NAV. Issue is aggressively priced. Considering missing clarity on financial data, one may give it a miss.
Review By on September 25, 2018
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of B&B Triplewall Containers Ltd. offers an early investment opportunity in B&B Triplewall Containers Ltd.. A stock market investor can buy B&B Triplewall Containers IPO shares by applying in IPO before B&B Triplewall Containers Ltd. shares get listed at the stock exchanges. An investor could invest in B&B Triplewall Containers IPO for short term listing gain or a long term.
Read the B&B Triplewall Containers IPO recommendations by the leading analyst and leading stock brokers.
B&B Triplewall Containers IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the B&B Triplewall Containers IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is B&B Triplewall Containers IPO?"
Our recommendation for B&B Triplewall Containers IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the B&B Triplewall Containers IPO.
The B&B Triplewall Containers IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit B&B Triplewall Containers IPO allotment status to check.
