Review By on August 26, 2015
H K Trade International Ltd (HKTIL) is into the business of manufacturing and supplying of adhesive tapes and synthetic paper (teslin papers) from jumbo rolls of adhesive tapes and synthetic paper (teslin) respectively. It operates as an important intermediary in the packing material supply chain, whereby the company purchases materials such as tapes, labels, papers, etc., in the roll form which is further cut and repacked into smaller rolls.
To part finance its long term working capital needs and general corporate expenses, the company is coming out with a maiden IPO of 1272000 equity shares of Rs. 10 each at a fixed price of Rs. 18 per share (including Rs. 8 premium per share) to mobilize Rs. 2.29 crore. Issue opens for subscription on 31.08.15 and will close on 03.09.15. Minimum application is to be made for 8000 shares and in multiples thereon, thereafter. Issue is lead managed by Intensive Fiscal Services Pvt Ltd and Sharex Dynamic (India) Pvt Ltd is the registrar to the issue. Shares will be listed on BSE SME after allotments. In December 2013, it issued 200000 shares at a price of Rs. 18 per share. Post IPO its current equity capital of Rs. 1.36 crore will stand enhanced to Rs. 2.63 crore.
On performance front, the company has posted an average EPS of Rs. 0.74 (on diluted basis). For the FY15 it has posted net profit of Rs. 0.12 crore on a turnover of Rs. 4.23 crore. If we attribute this earnings on post IPO equity then asking price is at a P/E of 39 plus making it a costly bet. As per prospectus of the company, it has no listed peer to compare with. Based on general market parameters, issue is highly priced.
Lead manager has average track records for its past mandates.
Considering the entry barriers and the costly bet, there is no harm giving this issue a miss. However, well informed risks aver investors may park their funds for medium to long term rewards, that may emerge going forward.
Review By on August 26, 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 H.K.Trade International Ltd. offers an early investment opportunity in H.K.Trade International Ltd.. A stock market investor can buy H.K.Trade International IPO shares by applying in IPO before H.K.Trade International Ltd. shares get listed at the stock exchanges. An investor could invest in H.K.Trade International IPO for short term listing gain or a long term.
Read the H.K.Trade International IPO recommendations by the leading analyst and leading stock brokers.
H.K.Trade International IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the H.K.Trade International IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is H.K.Trade International IPO?"
Our recommendation for H.K.Trade International IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the H.K.Trade International IPO.
The H.K.Trade International IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit H.K.Trade International IPO allotment status to check.
