Review By on March 15, 2018
Mittal Life Style Ltd. (MLSL) is a reputed trading house, dealing in Denim Fabrics. MLSL focuses on sourcing own designs and fabric ranges from various mills and wider distribution in India. Its flexible and responsive trading operations gives it the ability to quickly respond to change in market demand by being able to get production of new designs and weaves in the shortest turnaround times at economical rates through various mills, giving its clients the unbeatable advantage of tapping into the market as the demand peaks. It has one of the biggest stock-supported ranges of denim fabrics in India with over 200 regular sorts stocked.
To part finance its repayment of loans and working capital needs, MLSL is coming out with a maiden IPO of 2100000 equity shares of Rs. 10 each at a fixed price of Rs. 21 per share to mobilize Rs. 4.41 crore. Issue opens for subscription on 19.03.18 and will close on 21.03.18. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment shares will be listed on NSE SME Emerge. Issue is solely lead managed by Sarthi Capital Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 29.79% of the post issue capital of the company. Average cost of acquisition of shares by the promoters is Rs. 3.33, Rs. 5.60 and Rs. 10 per share. Its entire equity is issued at par. It has also issued bonus shares in the ratio of 2 for 1 in January 2015. Post issue, its current paid up equity capital of Rs. 4.95 crore will stand enhanced to Rs. 7.05 crore.
On performance front, MLSL has posted turnover/net profits of Rs. 32.32 cr. / Rs. 0.01 cr. (FY14)/ Rs. 46.35 cr./ Rs. 0.01 cr. (FY15)/ Rs.59.04 cr. / Rs. 0.01 (FY16) and Rs. 78.57 cr. / Rs. 0.34 cr. (FY17). For first half of the current fiscal, it has earned net profit of Rs. 0.30 cr. on a turnover of Rs. 43.80 cr. For FY14 to FY16 it posted negligible profits. For last three fiscals it has posted an average EPS of Rs. 0.44 and an average RoNW of 3.31%. Issue is priced at a P/BV of 1.98 on the basis of its NAV of Rs. 10.62 as on 31.03.17 and at a P/BV of 1.53 on the basis of its post issue NAV of Rs. 13.71. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 24 plus. It has no listed peers to compare with. Based on working, it appears that it has poor margins and issue is priced aggressively.
On the merchant banker’s front, this is the 31st mandate in last three fiscals. Out of last 10 listings, 2 opened at discount to offer price, 2 at par, 5 with a premium ranging from 4% to 20% and 1 main board IPO with a premium of 140% on the listing day.
Aggressive pricing couples with listless performance makes this issue a risky bet. Cash surplus risk savvy investors may consider it for long term at their own risk
Review By on March 15, 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 Mittal Life Style Ltd. offers an early investment opportunity in Mittal Life Style Ltd.. A stock market investor can buy Mittal Life Style IPO shares by applying in IPO before Mittal Life Style Ltd. shares get listed at the stock exchanges. An investor could invest in Mittal Life Style IPO for short term listing gain or a long term.
Read the Mittal Life Style IPO recommendations by the leading analyst and leading stock brokers.
Mittal Life Style IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Mittal Life Style IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Mittal Life Style IPO?"
Our recommendation for Mittal Life Style 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 Mittal Life Style IPO.
The Mittal Life Style IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Mittal Life Style IPO allotment status to check.
