Review By on August 23, 2017
Pashupati Cotspin Ltd. (PCL) is engaged in the business of processing of Kapas (raw cotton) by way of Ginning of cotton, spinning of cotton yarn and delineating Process. The products manufactured include Cotton bales, Cotton yarn and Black Cotton seeds (Delineate Seeds). By setting up of the Ginning and Spinning unit Company has entered into a forward integration of the Textile industry by manufacturing of cotton yarn to cope up with the changes in the fashion consciousness, development in the cotton textile sector and synchronizing with the initiatives provided by the Central and the state Government. The manufacturing facility of is situated at Kadi of Mahesana District in Gujarat state which is close to the rich cotton growing areas of Maharashtra and Saurashtra (region) of Gujarat. The company has established a capacity of the spindlage of total 25536 spindle, and 56 ginning units. Plant is equipped with modern and automatic plant and machinery. PCL is also using the storage space available with it for the purpose of letting it out to customers and thereby earning lease rentals as consideration.
To part finance its working capital, general corpus funds requirements, the company is coming out with a maiden IPO of 2784000 equity share of Rs. 10 each at a fixed price of Rs. 75 per share to mobilize Rs. 20.88 crore. Issue opens for subscription on 28.08.17 and will close on 31.08.17. Minimum application is to be made for 75 shares and in multiples thereon, thereafter. Post allotment shares will be listed on NSE SME Emerge. Issue is solely lead managed by Hem Securities Ltd and Sharex Dynamic (India) Pvt Ltd is the registrar to the issue. PCL has issued entire equity at par so far. Post issue its current paid up equity capital of Rs. 7.50 crore will stand enhanced to Rs. 10.28 cr. The issue constitutes 27.07% of the fully diluted post issue equity capital.
On performance front, PCL has posted turnover/net profits of Rs.75.29 cr. / Rs. 0.32 cr. (FY14), Rs. 265.81 cr. / Rs. 8.08 cr. (FY15), Rs. 262.36 cr. / Rs. 8.43 cr. (FY16) and Rs. 279.20 cr. / Rs. 13.48 cr. (FY17). Thus last three fiscal's average EPS is Rs. 11.25, average RoNW is 22.74%. Issue is priced at a P/BV of around 1.49. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 5.7 plus (against industry composite of 12 plus) making it reasonably priced offer.
On merchant banker's front, this is the 38th mandate from its stable. Out of last 10 listings, one has opened at a discount to offer price and the nine have shown positive opening on the day of listing. Incidentally out of last 10 listings, issue opened at discount (Globe Textile) and one at a meager premium (Laxmi Cotspin) was from the textile sector only.
Conclusion: Investors may consider investment for medium to long term.
Review By on August 23, 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 Pashupati Cotspin Ltd. offers an early investment opportunity in Pashupati Cotspin Ltd.. A stock market investor can buy Pashupati Cotspin IPO shares by applying in IPO before Pashupati Cotspin Ltd. shares get listed at the stock exchanges. An investor could invest in Pashupati Cotspin IPO for short term listing gain or a long term.
Read the Pashupati Cotspin IPO recommendations by the leading analyst and leading stock brokers.
Pashupati Cotspin IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Pashupati Cotspin IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Pashupati Cotspin IPO?"
Our recommendation for Pashupati Cotspin IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Pashupati Cotspin IPO.
The Pashupati Cotspin IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Pashupati Cotspin IPO allotment status to check.
