Review By on February 27, 2013
Having seen hat trick of BSE SME IPO in pre-budget period of February 2013, we have yet one more IPO that marks entry soon after budget to tap the primary market. The issue is of HPC Bioscience Ltd. Details of the issue are as under:
HPC Bioscience is engaged in the agriculture operations of cultivation, processing and distribution of agriculture commodities like wheat, paddy, sugar cane, fruits, vegetables and flowers. Company has also entered into the operations of wood plantation, wherein it is planting Bamboos, Poplar, Eucalyptus and Kadam. HPC has control over 400.66 Acres of land situated at Village Anandpur, Pant Nagar, District Udham Singh Nagar, Uttarakhand. It has commenced agriculture operations since 2011 and has entered in to a contract farming agreement with landowner, wherein it implemented the format of acquiring agriculture rights of agriculture lands in consideration of share in crops grown.
The company has undertaken plans for development of green house cultivation, development of farm land for transition to organic farming, strengthen supply chain management, procurement of farm tools and equipments and mobilizing general corpus fund. To finance the said program worth Rs. 15.75 crore the company is offering 4500000 equity share of Rs. 10 each at a price of Rs. 35 per share (i.e. including Rs. 25 per share as premium). The issue opens for subscription on 01.03.2013 and will close on 05.03.2013. Minimum application is to be made for 4000 shares and in multiples thereof thereafter. Guiness Corporate Advisors Pvt. Ltd is the sole manager to the offer and Cameo Corporate Services Ltd. is the registrar to the issue. Shares will be listed on BSE SME platform post issue.
As far as company's performance is concerned, it started its operation in 2008 and was having inconsistent other income till 2011. For the fiscal 2011-12 it marked turnover of Rs. 3.68 crore with a net profit of Rs. 3.05 crore. For first five months of the current fiscal it has posted turnover of Rs. 3.64 crore with a net profit of Rs. 2.95 crore. This translated EPS of Rs. 4.66 and 3.96 respectively on an equity capital of Rs. 1.75 crore for those periods. This equity now stands enhanced to Rs. 11.40 post preferential issue to promoters at par and also a bonus issue in the ratio of 1 for 1 in January 2013 and will further stand enhanced to Rs. 15.90 crore post this issue. So attribution of this equity to its earnings for five months ended 30.11.2012 of Rs. 2.96 crore translates into a P/E of 8 and its NAV as on that date was Rs. 10.40. Thus though the issue is priced around the current quote of its peer, it is still better to watch the performance of the company for the current fiscal as the scale of business may not get tuned to sudden hike in equity.
On merchant banker's performance part, this is the sixth issue in a row from this merchant banker for BSE SME platform and its earlier three issues that got listed have not done any remarkable performance on debut. Currently while RCL Retail is quoting at discount, Eco Friendly and Esteem Bio are having buyers at a premium to offer price may be in a bid to push sentiment for this issue that is in the similar activity and the market maker too is the same.
So it is better to stay away from this IPO. Risks aver investors can lock for long term plans, if they are still convinced.
Review By on February 27, 2013
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 HPC Biosciences Ltd. offers an early investment opportunity in HPC Biosciences Ltd.. A stock market investor can buy HPC Biosciences IPO shares by applying in IPO before HPC Biosciences Ltd. shares get listed at the stock exchanges. An investor could invest in HPC Biosciences IPO for short term listing gain or a long term.
Read the HPC Biosciences IPO recommendations by the leading analyst and leading stock brokers.
HPC Biosciences IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the HPC Biosciences IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is HPC Biosciences IPO?"
Our recommendation for HPC Biosciences IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the HPC Biosciences IPO.
The HPC Biosciences IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit HPC Biosciences IPO allotment status to check.
