Review By on April 28, 2016
Darshan Orna Ltd (DOL) is a Small and Medium Enterprise (SME) engaged in the Gold & Silver Jewellery and Ornaments Business. The Company started its commercial operations as a Wholesaler and Trader of Gold and Silver Jewelries and Ornaments by setting a unit in Manek Chowk area of Ahmedabad in North Gujarat, which is known as a hub of Gold & Silver Market. Company’s portfolio comprises Traditional Jewellery, Indo-Western Jewellery & Modern Jewellery. DOL’s Jewelries and Ornaments are designed keeping in mind the demand of various customers coming from diverse cultures and age groups. Over the last couple of years, the company has achieved tremendous growth in sales. The company sources its raw material from its suppliers. Over the years, the company has built up a credible sales-force to market its jewelries in Ahmedabad. The company achieved sales of Rs. 8 Crores in Financial Year 2014-2015, and has projected a sales turnover of approximately Rs. 25 Crores for the Financial Year 2015-2016.
To part finance its working capital requirements and general corpus funds, the company is issuing 1256000 equity share of Rs. 10 each at a fixed price of Rs. 60 per share to mobilize Rs. 7.54 crore. Issue opens for subscription on 02.05.16 and will close on 11.05.16. (Eyebrow raised by market men for such a long duration). Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Issue is solely managed by First Overseas Capital Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE SME. Having issued initial equity at par, it issued further shares at a price ranging from Rs. 60 to Rs. 100 during the years 2012to 2015. It has also issued bonus shares in the ratio of 11 shares for every 2 shares held. Its current paid up equity capital of Rs. 3.51 crore will stand enhanced to Rs. 4.76 crore post IPO.
On performance front, the company has reported turnover/net profits of Rs. 0.80 cr. / Rs. 0.002 cr. (FY13), Rs. 1.20 cr. / Rs. 0.002 cr. (FY14), Rs. 8.23 cr. / Rs. 0.02 cr. (FY15). For first nine months ended 31.12.15 it has earned net profit of Rs. 0.22 crore on a turnover of Rs. 12.04 crore. If we annualize these earnings and attribute to the fully diluted equity post IPO then asking price is at a P/E of 98 plus which is much higher compared to average industry average P/E of 35 plus and thus makes it aggressively priced issue.
Merchant banker has poor track records for past mandates.
Since issue is aggressively priced, there is no harm giving it a miss. However, only risk savvy investors with surplus funds may park their funds for long term rewards.
Review By on April 28, 2016
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 Darshan Orna Ltd. offers an early investment opportunity in Darshan Orna Ltd.. A stock market investor can buy Darshan Orna IPO shares by applying in IPO before Darshan Orna Ltd. shares get listed at the stock exchanges. An investor could invest in Darshan Orna IPO for short term listing gain or a long term.
Read the Darshan Orna IPO recommendations by the leading analyst and leading stock brokers.
Darshan Orna IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Darshan Orna IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Darshan Orna IPO?"
Our recommendation for Darshan Orna IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Darshan Orna IPO.
The Darshan Orna IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Darshan Orna IPO allotment status to check.
