Review By on September 12, 2017
R M Drip & Sprinklers System Ltd. (RMD) is engaged in manufacture and sale of Micro Irrigation System (MIS) consisting of drip irrigation system and sprinkler irrigation system along with its components, irrigation accessories and allied products. RMD's revenue mix comprises of open market and project market models. Majority of its revenue comes from open market with the help of channel partners. RMD operates in states of Maharashtra, Gujarat, Karnataka and MP. Company's product range include HDPE Pipes, Pipes Fittings and Irrigation Equipments including drip/sprinkler systems, Disc filters, Screen filters, Hydro-Cyclone filters, Sand (Gravel) filters, Compression fittings, valves (Electric & Mechanical), Fertilizer Tanks etc.
To part finance working capital and general corpus fund needs, RMD is coming out with a maiden IPO of 2010000 equity share of Rs. 10 each via book building route with a price band of Rs. 53 – 57 per share to mobilize Rs. 10.65 cr. to Rs. 11.46 crore (based on lower and upper price bands). Issue opens for subscription on 19.09.17 and will close on 25.09.17. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 30.04% of the fully diluted post issue paid up capital of the company. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Having raised most of its equity at par, it also issued shares at a price of Rs. 20 per share in October 2014 and has issued bonus shares in the ratio of 15 for 1 in September 2014, 0.7 to 1 in November 2014, 2.6 to 1 in July 2017. Post issue, its current paid up equity capital of Rs. 4.68 crore will stand enhanced to Rs. 6.69 crore.
On performance front, RMD has reported turnover/net profits of Rs. 3.10 cr. / Rs. 0.03 cr. (FY14), Rs. 5.78 cr. / Rs. 0.24 cr. (FY15), Rs. 11.79 cr. / Rs. 0.32 cr. (FY16) and Rs. 28.73 cr. / Rs. 1.36 cr. (FY17). If we attribute latest earnings on fully diluted equity post issue then asking price is at a P/E of 28 plus (on the basis of upper price band) against industry average of 35 plus. For last three fiscals, it has posted average EPS of Rs. 2.68 and average RoNW of 24.96%. Issue is priced at a P/BV of 4.3 plus. Thus issue is fully priced.
On merchant banker's front, this is the 45th mandate 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: Cash surplus investors may consider investment for long term.
Review By on September 12, 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 R M Drip & Sprinklers Systems Ltd. offers an early investment opportunity in R M Drip & Sprinklers Systems Ltd.. A stock market investor can buy R M Drip IPO shares by applying in IPO before R M Drip & Sprinklers Systems Ltd. shares get listed at the stock exchanges. An investor could invest in R M Drip IPO for short term listing gain or a long term.
Read the R M Drip IPO recommendations by the leading analyst and leading stock brokers.
R M Drip IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the R M Drip IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is R M Drip IPO?"
Our recommendation for R M Drip IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the R M Drip IPO.
The R M Drip IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit R M Drip IPO allotment status to check.
