Review By on September 21, 2017
Goldstar Power Ltd. (GPL) is a storage battery manufacturing company selling its products under 'Star Gold' brand. Company procures battery scrap and discarded batteries from dealers/retailers and converts into finished product. Having started as battery plates manufacturing company, gradually it has moved to forward and backward integration to emerge as full-fledged battery manufacturer. Company's product range covers various types of batteries including automotive batteries, tubular batteries, SMF series batteries, VRLA batteries, Solar batteries, Pure Lead and Alloy batteries.
To part finance its working capital and general corpus fund needs, GPL is coming out with a maiden IPO of 2898000 equity shares of Rs. 10 each at a fixed price of Rs. 25 per share to mobilize Rs. 7.25 crore. Issue opens for subscription on 27.09.17 and will close on 29.09.17. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. The issue will constitute 27.09% of the fully diluted post issue paid up equity share capital of the company. Having issued initial equity at par from incorporation till December 2005, it raised further equity at a price of Rs. 60 per share during March 2007 and January 2012 and has issued bonus shares in the ratio of 5 for 1 in August 2017. Post issue, company's current paid up equity capital of Rs. 7.80 crore will stand enhanced to Rs. 10.70 crore.
On performance front, GPL has posted turnover/net profits of Rs. 49.24 cr. / Rs. 0.30 cr. (FY14), Rs. 41.30 cr. / Rs. – (0.66) cr. (FY15), Rs.40.51 cr. / Rs. – (0.39) cr. (FY16) and Rs. 54.97 cr. / Rs. 0.91 cr. (FY17). For FY 15 and 16 it suffered a setback and incurred losses. FY 17 performance is a bit surprising with big jump in top and bottom lines. Last three fiscals average EPS is Rs. 0.28 and average RoNW is 1.74%. Issue is priced at a P/BV of 1.69. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 29 plus making it a fully priced issue. It is playing in highly competitive segment and past performance is not that encouraging.
On merchant banker's front, this is the 50th mandate from Pantomath in last three years. Out of last 10 recent listings, 1 opened at discount, 1 at par and the rest with 1 to 18% premium on IPO price.
Conclusion: Risk savvy cash surplus investors may consider investment for long term.
Review By on September 21, 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 Goldstar Power Ltd. offers an early investment opportunity in Goldstar Power Ltd.. A stock market investor can buy Goldstar Power IPO shares by applying in IPO before Goldstar Power Ltd. shares get listed at the stock exchanges. An investor could invest in Goldstar Power IPO for short term listing gain or a long term.
Read the Goldstar Power IPO recommendations by the leading analyst and leading stock brokers.
Goldstar Power IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Goldstar Power IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Goldstar Power IPO?"
Our recommendation for Goldstar Power 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 Goldstar Power IPO.
The Goldstar Power IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Goldstar Power IPO allotment status to check.
