Review By on December 1, 2017
MRC Exim Ltd. (MRC) is engaged in the business of trading of various industrial, metals and alloy products including iron and steel. MRC is a multi-product trading company with a diverse product portfolio. It is currently serving the corporate and other clients from fabrication and manufacturing industry.
To part finance its working capital and general corpus fund needs, MRC is coming out with a maiden IPO of 3000000 equity shares of Rs. 10 each at a fixed price of Rs. 15 per share to mobilize Rs. 4.50 crore. Issue opens for subscription on 06.12.17 and will close on 08.12.17. Minimum application is to be made for 8000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Inventure Merchant Banker Services Pvt. Ltd. and Purva Sharegistry India Pvt. Ltd. is the registrar to the issue. Issue constitutes 28.79% of the post issue paid up capital of the company. Having issued initial equity at par, it raised further equity at a price of Rs. 25 per share between March 2016 and March 2017 and has also issued bonus shares in the ratio of 3 for 2 in August 2017. Post issue, its current paid up equity capital of Rs.7.42 crore will stand enhanced to Rs.10.42 crore. Average cost of acquisition by promoters ranging from Rs. 9.77 to Rs. 10 per share.
On performance front, MRC has reported turnover/net profits of Rs. 4.09 cr. / Rs. 0.01 cr. (FY16) and Rs. 16.70 cr. / Rs. 0.12 cr. (FY17). For H1 of current fiscal it has posted net profit of Rs. 0.05 cr. on a turnover of Rs. 9.07 cr. For last two and half fiscals it has reported an average EPS of Rs. 0.42 per share and average RoNW of 5.25%. Issue is priced at a P/BV of 1.48 on the basis of NAV as on 30.09.17 and at a P/BV of 1.30 on the basis of post issue NAV. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 150 against industry average of 66. Thus issue is priced exorbitantly.
On merchant banker’s front, this is the 4th mandate from its stable and last three listings after opening at a premium, close at a discount to offer price on the day of listing.
Conclusion: Investors may give this highly priced issue with dismal performance a miss. (Avoid)
Review By on December 1, 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 MRC Exim Ltd. offers an early investment opportunity in MRC Exim Ltd.. A stock market investor can buy MRC Exim IPO shares by applying in IPO before MRC Exim Ltd. shares get listed at the stock exchanges. An investor could invest in MRC Exim IPO for short term listing gain or a long term.
Read the MRC Exim IPO recommendations by the leading analyst and leading stock brokers.
MRC Exim IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the MRC Exim IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is MRC Exim IPO?"
Our recommendation for MRC Exim IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the MRC Exim IPO.
The MRC Exim IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit MRC Exim IPO allotment status to check.
