Review By on June 23, 2017
GG Engineering Ltd (GGEL) is an authorized O.E.A. of Ashok Leylend & Perkins make engine. It manufactures DG Sets in the range of 10 to 2250 KVA with Ashok Leylend Engine ranging from 10 to 250 KVA and with Perkins Engine ranging from 300 to 2250 KVA. The company is equipped with all facilities to execute all types of manufacturing activities such as punching, forming, shearing, bending, fabrication, welding & assembly etc.
To part finance its working capital and general corpus fund needs, the company is coming out with a maiden IPO of 1116000 equity share of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 2.23 crore. Issue opens for subscription on 30.06.17 and will close on 07.07.17. Minimum application is to be made for 6000 shares and in multiples, thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is lead managed by Navigant Corporate Advisors Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue. Its entire equity is issued at par so far. Post issue its current paid up equity capital of Rs. 3.07 crore will stand enhanced to Rs. 4.19 crore.
On performance front, the company has posted turnover/net profit-(loss) of Rs. 2.13 cr. / Rs. (-0.01) cr. (FY14), Rs. 2.07 cr./ Rs. 0.01 cr. (FY15) and Rs. 5.20 cr. / Rs. 0.14 cr. (FY16). For the first nine months of the current fiscal ended on 31.12.16 it has earned net profit of Rs. 0.02 crore on a turnover of Rs. 5.99 crore. Thus it has inconsistency in top and bottom lines. If we annualize latest earnings and attribute it on fully diluted equity post IPO, then asking price is at a P/E of 285 plus against industry average P/E of 36 plus. Its average RoNW for last three fiscals is very poor at just 2.20%. Offer price is at a P/BV of 1.90. Peers are trading in the range of 13 to 18 P/Es. GGEL operates in highly competitive field and has insufficient market reach. Its dependence on few suppliers may cause concern.
On merchant banker’s front, this is the 5th mandate from its stable and past four issues have mixed track record. Surprisingly, prospectus does not contain the track record of merchant banker. Even web site of merchant banker is not having updated track record of its past mandates.
Conclusion: Investors may give a miss to this highly priced issue.
Review By on June 23, 2017
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 G G Engineering Ltd. offers an early investment opportunity in G G Engineering Ltd.. A stock market investor can buy G G Engineering IPO shares by applying in IPO before G G Engineering Ltd. shares get listed at the stock exchanges. An investor could invest in G G Engineering IPO for short term listing gain or a long term.
Read the G G Engineering IPO recommendations by the leading analyst and leading stock brokers.
G G Engineering IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the G G Engineering IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is G G Engineering IPO?"
Our recommendation for G G Engineering IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the G G Engineering IPO.
The G G Engineering IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit G G Engineering IPO allotment status to check.
