Review By on January 22, 2018
Gujarat Hy-Spin Ltd. (GHSL) that initially started as a trader of cotton bales, cotton seeds and wash oils, and product jobworks is now engaged in manufacturing of cotton yarn. GHSL sells its products to traders and industrial units engaged in weavings.
For listing purpose, GHSL is coming out with a maiden IPO of 4450000 equity shares of Rs. 10 each at par by way of offer for sale (i.e. totally a secondary issue) to mobilize Rs. 4.45 crore. Being OFS, no money is going to company. Issue opens for subscription on 25.01.18 and will close on 31.01.18. Minimum application is to be made for 10000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 26.57% of the post issue paid up equity capital of the company. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Its entire equity is issued at par. Being offer for sale, post issue, Company’s paid up equity capital remains same at Rs. 16.75 crore.
On performance front, GHSL has posted turnover/net profits of Rs. 52.12 cr. / Rs. –0.34 cr. (FY15, Rs. 51.89 cr. / Rs. 0.04 cr. (FY16), Rs. 52.05 cr. / Rs. 0.15 cr. (FY17). Thus while its top line is almost static, its bottom line has shown some improvement, though not very encouraging. For first half of current fiscal, it has earned net profit of Rs. 0.17 crore on a turnover of Rs. 26.39 crore which is a bit surprising. For last three fiscals it has posted an average EPS of Rs. 0.02 and an average RoNW of 0.12. Issue is priced at a P/BV of around 0.9 plus based on its NAV of Rs. 11.12 as on 30.11.17. If we annualize latest earnings and attribute it on post issue equity, then asking price is at a P/E of around 50 thus even at par value, it is a costly bet. Peers are trading in the P/E range of 6 to 44.
On merchant banker’s front, this is the 57th mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened around par and the rest with premiums ranging from 1% to 130% on the day of listing. 130% rewards are from the only main board IPO of this merchant banker i.e. Astron Paper.
Investment in this at par issue may be considered for long term only.
Review By on January 22, 2018
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 Gujarat Hy-Spin Ltd. offers an early investment opportunity in Gujarat Hy-Spin Ltd.. A stock market investor can buy Gujarat Hy-Spin IPO shares by applying in IPO before Gujarat Hy-Spin Ltd. shares get listed at the stock exchanges. An investor could invest in Gujarat Hy-Spin IPO for short term listing gain or a long term.
Read the Gujarat Hy-Spin IPO recommendations by the leading analyst and leading stock brokers.
Gujarat Hy-Spin IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Gujarat Hy-Spin IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Gujarat Hy-Spin IPO?"
Our recommendation for Gujarat Hy-Spin 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 Gujarat Hy-Spin IPO.
The Gujarat Hy-Spin IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Gujarat Hy-Spin IPO allotment status to check.
