Review By on May 18, 2018
Latteys Industries Ltd. (LIL) is in the business of manufacturing of pumping solutions for homes, agriculture and industrial sectors. Pumps include submersible, self priming, centrifugal, shallow and horizontal pumps. Its product portfolio has more than 700 models of pumps and is catering domestic demands.
To part finance its working capital and general corpus fund needs, LIL is coming out with a maiden IPO of 1222000 equity shares of Rs. 10 each at a fixed price of Rs.66 per share to mobilize Rs. 8.07 crore. Issue opens for subscription on 23.05.18 and will close on 28.05.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. 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 26.57% of the post issue paid up capital of the company. Having issued initial equity at par, it raised further equity in the price range of Rs. 12.53 to Rs. 50 per share and has also issued bonus shares in the ratio of 1 for 1 in January 2019. Average cost of acquisition of shares by the promoters is Rs. 6.23 and Rs. 6.29 per share.Post issue, its current paid up equity capital of Rs. 3.38 cr. will stand enhanced to Rs. 4.60 cr.
On performance front, for last four fiscals LIL has posted turnover/net profits of Rs. 18.56 cr. / Rs. 0.14 cr. (FY14), Rs. 21.53 cr. / Rs. 0.14 cr. (FY15), Rs. 26.05 cr. / Rs. 0.31 cr. (FY16) and Rs. 35.77 cr. / Rs. 0.56 cr. (FY17). For first nine months of FY18 it has earned net profits of Rs. 0.43 cr. on a turnover of Rs. 22.89 cr. For last three fiscals it has posted an average EPS of Rs. 1.30 and an average RoNW of 15.01%. Issue is priced at a P/BV of 6.03 on the basis of NAV of Rs. 10.95 as on 31.12.17 and at a P/BV of 2.50 on the basis of post issue NAV of Rs. 26.44 per share. If we annualize latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 53 plus making it aggressively priced issue. As per offer documents it is showing Roto Pumps, Shakti Pumps and Korloskar Bros as its listed peers that are currently trading at a P/Es of 32, 43 and 45 respectively (as on 18.05.18). As on 31.12.17 its debt ratio is 3.41.
On merchant banker’s front, this is 61st mandate from its stable in last three fiscals. Out of last 10 listings all opened with a premium on offer price ranging from 1.59% to 40% on the day of listing.
Review By on May 18, 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 Latteys Industries Ltd. offers an early investment opportunity in Latteys Industries Ltd.. A stock market investor can buy Latteys Industries IPO shares by applying in IPO before Latteys Industries Ltd. shares get listed at the stock exchanges. An investor could invest in Latteys Industries IPO for short term listing gain or a long term.
Read the Latteys Industries IPO recommendations by the leading analyst and leading stock brokers.
Latteys Industries IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Latteys Industries IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Latteys Industries IPO?"
Our recommendation for Latteys Industries IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Latteys Industries IPO.
The Latteys Industries IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Latteys Industries IPO allotment status to check.
