Review By on March 8, 2018
Benara Bearings & Pistons Ltd. (BBPL) is engaged in the manufacturing of engine bearings, bushes, pistons, piston pin, piston rings, cylinder liners and sleeves and engine valves. It is an ISO 9001:2015 company. Additionally, BBPL is also engaged in the marketing of products like ball bearings, spark plugs, rocker arms, timing chains, connecting rods, valve guides, valve seals & batteries (Motorcycle / Inverter / E Rickshaws) under own brand which it sources through third party contract manufacturing. Company markets its product in OEM and Replacement market and majorly focuses on two wheeler replacement markets.
To part finance opening of new retail stores, working capital for own and subsidiary, general corpus fund needs, BBPL is coming out with a maiden IPO of 5316000 equity shares of Rs. 10 each via book building route with a price band of Rs. 60 – Rs. 63 to mobilize Rs. 31.90 cr. – Rs. 33.49 crore based on lower and upper price bands. Issue opens for subscription on 20.03.18 and will close on 22.03.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. It has reserved 76000 shares for eligible employees. Issue constitutes approx. 30% post issue paid up capital of the company. Having issued initial equity at par since inception till March 1996, it raised further equity in the price range of Rs. 31 to Rs. 60 per share. It has also issued bonus shares in the ratio of 3 for 1 in December 2017. Post issue, its current paid up equity capital of Rs. 12.39 crore will stand enhanced to Rs. 17.71 crore. Average cost of acquisition of shares by the promoters is Rs. 8.74 and Rs. 9.52 per share.
On performance front, BBPL has (on a consolidated basis) reported turnover/net profits of Rs. 80.24 cr. / Rs. 0.76 cr. (FY16) and Rs. 122.63 cr. / Rs. 4.22 cr. (FY17). For first half of current fiscal, it has earned net profit of Rs. 4.09 cr. on a turnover of Rs. 67.25 cr. Sudden jump in net profits for FY 17 and first half of current fiscal appears as window dressing before IPO. For last three fiscals it has posted an average EPS of Rs. 3.30 and an average RoNW of 17.52%. Issue is priced at a P/BV of 3.35 on the basis of its NAV of Rs. 18.83 (consolidated) as on 30.09.17. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 14 against industry composite P/E of 32. As per offer documents, it listed peers are trading at a P/E of Shriram Piston (39), Federal Mogul (31) and Samkrg Piston (13) (as on 08.03.18).
On merchant banker’s front, this is 64th mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened at discount to offer price, 1 just Rs. 0.05 paise up on offer price, 7 with a premium ranging from 4% to 20% and 1 (main board issue) with a premium of 130% on the offer price on the day of listing.
Company’s recent working raises eyebrows and is a major concern for future outlook. Although issue is priced reasonably on the basis of such superb profits, risk savvy cash surplus investors may consider investment at their own risk.
Review By on March 8, 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 Benara Bearings & Pistons Ltd. offers an early investment opportunity in Benara Bearings & Pistons Ltd.. A stock market investor can buy Benara Bearings IPO shares by applying in IPO before Benara Bearings & Pistons Ltd. shares get listed at the stock exchanges. An investor could invest in Benara Bearings IPO for short term listing gain or a long term.
Read the Benara Bearings IPO recommendations by the leading analyst and leading stock brokers.
Benara Bearings IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Benara Bearings IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Benara Bearings IPO?"
Our recommendation for Benara Bearings IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Benara Bearings IPO.
The Benara Bearings IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Benara Bearings IPO allotment status to check.
