Review By on March 24, 2014
R & B Denims is a Surat based company engaged in denim textile production and marketing. Before this IPO the company issued 1249000 equity shares at a price of Rs. 20 per share on 02.09.11, 415560 equity shares at a price of Rs. 250 per share between 02.12.11 to 27.03.12 and just 10 shares at a price of Rs. 75 on 22.10.12. On the same date it issued bonus in the ratio of 2 for 1. Thereafter, again it issued 3916666 equity shares at a price of Rs. 75 per share between 31.03.13 to 28.06.13 followed by bonus issue in the ratio of 2 for 1 on 09.10.13. Post this issue, company’s existing equity capital of Rs. 10.28 crore will rise to Rs. 13.99 crore.
Now to reduce its high cost debts, the company is coming out with an IPO of 3710000 equity share of Rs. 10 each at par to mobilize Rs. 3.71 crore. The issue opens for subscription on 28.03.14 and will close on 04.04.14. Minimum application is to be made for 10000 shares and in multiples thereof, thereafter. Issue is lead managed by Hem Securities Ltd and Bigshare Services Pvt. Ltd. is the registrar. Post allotment, shares will be listed on BSE SME.
As the company started its operations in 2012, it achieved a turnover of Rs. 60.59 crore for the fiscal 2012-13 and earned a net profit of Rs. 0.01 crore. For first six months of the current fiscal ended on 30.09.13, it has posted net profit of Rs. 0.13 crore on a turnover of Rs. 43.02 crore. So if we attribute these earnings on annualized basis on the enhanced equity base of Rs. 14 crore then the EPS stands at Rs. 0.19 per share and thus even at par, the asking price is at a P/E of 52+ and at a P/BV of 0.33 (Thanks to issue at hefty premiums as mentioned above).
On merchant banker’s part, it has mixed trends for its past mandate and has done operations in recent SME mandates, which may tempt HNIs. Company’s fundamentals are very poor.
The issue that has entry barrier as well is not worth for average investors.
Review By on March 24, 2014
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&B Denims Ltd. offers an early investment opportunity in R&B Denims Ltd.. A stock market investor can buy R&B Denims IPO shares by applying in IPO before R&B Denims Ltd. shares get listed at the stock exchanges. An investor could invest in R&B Denims IPO for short term listing gain or a long term.
Read the R&B Denims IPO recommendations by the leading analyst and leading stock brokers.
R&B Denims IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the R&B Denims IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is R&B Denims IPO?"
Our recommendation for R&B Denims IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the R&B Denims IPO.
The R&B Denims IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit R&B Denims IPO allotment status to check.
