Review By on September 28, 2016
Gretex Industries Ltd (GIL) has started its business by manufacturing of fabric and hosiery garments like thermal innerwear and leggings in the year 2013-14. It also started taking job work assignments for knitting for Rupa & Company Limited and gradually for others. Further GIL also started production under
its brand “Lekme” besides undertaking job work assignments. The company manufactures thermal innerwear and leggings under own brand name of “Lekme”. Its product range includes production of fabric by using Interlock, Rib, Reversible, Fleece, Polyfill techniques. It also manufactures Sinker using Lycra yarns. Company’s manufacturing facility is situated at Jalan Industrial Complex in Domjur Area in the district of Howrah, which is one of the oldest Industrial Complex nearby Kolkata.
To part finance working capital and general corpus funds requirements, the company is coming out with a maiden IPO of 2028000 equity share of Rs. 10 each via book building route with a price band of Rs. 19-21 to mobilize around Rs. 3.85 to Rs. 4.26 crore (based on lower and upper price bands). Issue comprises of offer for sale (924000 shares) as well as fresh equity issue (1104000). Issue opens for subscription on 30.09.16 and will close on 05.10.16. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Issue is jointly lead managed by Pantomath Capital Advisors Pvt Ltd and Indian Overseas Bank. Bigshare Services Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on NSE SME Emerge platform. After issuing incorporation equity at par, it raised further equity at a price of Rs. 100 to Rs. 1000 during 2010-2013. It also issued bonus shares in the ratio of 33 for 1 in June 2015 and then further equity at a price of Rs. 11 per share in July 2015. Post issue its current paid up equity capital of Rs.3.16 crore will stand enhanced to Rs. 4.26 crore.
On performance front, for last four fiscals it has posted turnover / net profit of Rs.0.12 cr./ Rs. 0.003 cr. (FY13), Rs. 0.22 cr. / Rs. 0.03 cr. (FY14), Rs. 4.04 cr. / Rs. 0.28 cr. (FY15) and Rs. 3.76 cr. / Rs. 0.31 cr. (FY16). If we attribute latest earnings on fully diluted equity post IPO then asking price is at a P/E of 26+ to 28+ (based on lower and upper price bands). As per RHP the company has no listed peers to compare with. Based on performance and earnings, issue price appears to be on higher side.
On merchant banker’s front, this is the 26th mandate from Pantomath whereas 2nd from IOB. Pantomath has shown mixed trends for its past mandates on listings.
Conclusion: Only risk savvy cash surplus investors may consider investment for long term.
Review By on September 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 Gretex Industries Ltd. offers an early investment opportunity in Gretex Industries Ltd.. A stock market investor can buy Gretex Industries IPO shares by applying in IPO before Gretex Industries Ltd. shares get listed at the stock exchanges. An investor could invest in Gretex Industries IPO for short term listing gain or a long term.
Read the Gretex Industries IPO recommendations by the leading analyst and leading stock brokers.
Gretex Industries IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Gretex Industries IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Gretex Industries IPO?"
Our recommendation for Gretex Industries IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Gretex Industries IPO.
The Gretex Industries IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Gretex Industries IPO allotment status to check.
