Review By on July 24, 2015
Emkay Taps & Cutting Tools Ltd (ETCT) is engaged in making threads tools (HSS Taps) and selling under 'Emkay' brand. The varieties of taps offered by it include HIPerformance Thread Forming Taps, HI-Performance Spiral Fluted Taps, HI-Performance Spiral Pointed Taps, HIPerformance Taps for Cast Iron Tapping, HI-Performance Special Taps, PM Taps, Carbide Taps, Special Designed Roll Taps, Through Coolant Taps (T.C.H), Special Geometry ?Spiral Fluted? Taps, Special Geometry ?Spiral Pointed? Taps, Taps With Special Coatings among others are widely used in several critical auto components, ensuring the right product for each customer specific production requirement and timely deliveries has given ETCT a competitive advantage in this high-precision industry.
To avail listing benefits and providing liquidity to stakeholders, the company is coming out with a maiden IPO under 'Offer for Sale' with 471200 equity share of Rs. 10 each at a fixed price of Rs. 330 per share to mobilize Rs. 15.55 crore. Issue opens for subscription on 27.07.15 and will close on 30.07.15. Minimum application is to be made for 400 shares and in multiples thereon, thereafter. Issue is lead managed by Hem Securities Ltd. and Bigshare Services Pvt Ltd is the registrar to the issue. This being offer for sale, its equity remains at Rs.1.78 crore post issue. Shares will be listed on BSE SME after allotments.
On performance front, for last three fiscals, the company has posted and average EPS of Rs. 30.61 with turnover/net profits of Rs. 35.65 crore/Rs. 8.35 crore (FY 2012), Rs. 31.52 crore/Rs. 4.92 crore (FY 2013) and Rs. 30.01 crore/Rs. 5.74 crore on an equity base of Rs. 0.85 crore. Post incorporation till 1996 it issued equity shares at par, in 1998 it issued the same at Rs. 24 per share, in 2008 it issued fresh equity at a price of Rs. 150, in 2014 it bought back equity at a price of Rs. 192 per share and in March 2015 it issued bonus shares in the ratio of 1.5 shares for every 1 share held that took its paid up equity capital to Rs. 1.78 crore. For 10months ended 31.01.15, It has posted net profit of Rs. 8.64 crore on a turnover of Rs. 32.54 crore. If we annualize these earnings and attribute it on fully diluted current equity, then the EPS stands at Rs. 58.26 translating in to asking price at a P/E of 6. As per prospectus, on equity of Rs. 0.85 crore, its asking price is at a P/E of 10+ and at a P/BV of 1. Thus the issue appears justifiably priced. However, its inconsistent performance for last three fiscals raises concern.
On merchant banker's front, this is 14th IPO from its stable and past listed mandates have given average returns in 11 out of 13.
Review By on July 24, 2015
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 Emkay Taps & Cutting Tools Ltd. offers an early investment opportunity in Emkay Taps & Cutting Tools Ltd.. A stock market investor can buy Emkay Taps IPO shares by applying in IPO before Emkay Taps & Cutting Tools Ltd. shares get listed at the stock exchanges. An investor could invest in Emkay Taps IPO for short term listing gain or a long term.
Read the Emkay Taps IPO recommendations by the leading analyst and leading stock brokers.
Emkay Taps IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Emkay Taps IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Emkay Taps IPO?"
Our recommendation for Emkay Taps IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Emkay Taps IPO.
The Emkay Taps IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Emkay Taps IPO allotment status to check.
