Review By on September 17, 2017
Innovative Tyres & Tubes Ltd. (ITTL) is a tyre and tube manufacturing company and marketing its products under “Innovative” brand. Its plant is located at Halol, in Gujarat. ITTL has strong business relationship with tyre major Ceat Ltd. Company is manufacturing all segments of Nylon Tyres. Products of the company are used by two/three wheelers, LCVs, Trucks, Agriculture and Off the Road segments. Company is catering to domestic markets/after sales market, OEMs and is also exporting its products.
To part finance its expansion plans for existing facilities and working capital/general corpus fund needs, ITTL is coming out with a maiden IPO of 6297000 equity share of Rs. 10 each via book building route with a price band of Rs. 42 – Rs. 45. Company hopes to raise Rs. 26.45 cr. to Rs. 28.34 cr. (based on lower and upper price bands). Issue opens for subscription on 22.09.17 and will close on 26.09.17. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Company has reserved 870000 equity shares for eligible employees. 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. Issue constitutes 35% of fully diluted post issue paid up equity capital of the company. Having issued equity at par from MoA in 1995 till March 2005, it raised further equity in the price range of Rs. 31.62 to Rs. 38.42 per share between November 2006 and May 2017. Post issue, its current paid up equity capital of Rs. 11.69 crore will stand enhanced to Rs. 17.99 crore.
On performance front, ITTL has posted turnover/net profits of Rs. 126.58 cr. / Rs. 2.26 cr. (FY14), Rs. 130.52 cr. / Rs. 4.12 cr. (FY15), Rs. 125.90 cr. / Rs. 1.89 cr. (FY16) and Rs. 132.54 cr. / Rs. 4.08 cr. (FY17). Thus it has seen see-saw mode in top and bottom lines for last four fiscals. For last three fiscals, it has posted an average EPS of Rs. 3.15 and average RoNW of 8.24%. Issue is priced at a P/BV of 1.15. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 19 plus. Peers are trading at a P/E ranging 17 to 21 as shown in the prospectus. Thus issue is fully priced.
On merchant banker’s front, this is the 47th 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: Considering fully priced issue, cash surplus investors may consider long term investment.
Review By on September 17, 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 Innovative Tyres & Tubes Ltd. offers an early investment opportunity in Innovative Tyres & Tubes Ltd.. A stock market investor can buy Innovative Tyres IPO shares by applying in IPO before Innovative Tyres & Tubes Ltd. shares get listed at the stock exchanges. An investor could invest in Innovative Tyres IPO for short term listing gain or a long term.
Read the Innovative Tyres IPO recommendations by the leading analyst and leading stock brokers.
Innovative Tyres IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Innovative Tyres IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Innovative Tyres IPO?"
Our recommendation for Innovative Tyres IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Innovative Tyres IPO.
The Innovative Tyres IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Innovative Tyres IPO allotment status to check.
