Review By Dilip Davda on November 30, 2017
Ratnabhumi Developers Ltd. (RDL) is engaged in acquiring land, carrying out construction work, developing and organizing of immovable properties etc. From 2012 to 2017 it handled selling, marketing, renting of property called ?Ratna- TURQUOISE’ developed by it. Company’s business verticals are classified as revenue from commercial projects, trading in plot of land, rental income and investment/trading in residential schemes. ?
To part finance its acquisition of land/plot of land and other strategic initiatives, 45% contribution towards capital stake in Rajul Projects LLP, general corpus fund needs, RDL is coming out with a maiden IPO of 3700000 equity shares of Rs. 10 each at a fixed price of Rs. 63 per share to mobilize Rs.23.31 crore. Issue opens for subscription on 04.12.17 and will close on 06.12.17. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 27.01% of the post issue paid up capital of the company. Issue is solely lead managed by Corporate Capital Ventures Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. It has issued equity at par in 2006 and 2009 and has also issued bonus shares in the ratio of 19 for 1 in October 2017. Post issue, its current paid up equity capital of Rs. 10.00 crore will stand enhanced to Rs. 13.70 crore. The average cost of acquisition of shares by promoters is Rs. 0.50 per share.
On performance front, RDL has reported turnover/net profits of Rs. 6.30 cr. / Rs. 0.31 cr. (FY14), Rs. 7.56 cr. / Rs. 1.09 cr. (FY15), Rs. 7.76 cr. / Rs. 1.59 cr. (FY16) and Rs. 9.81 cr. / Rs. 1.35 cr. (FY17). It marked setback in bottom line for FY17. For Q1 of current fiscal, it has posted net profit of Rs. 0.07 cr. on a turnover of Rs. 0.18 cr. For last three fiscals it has posted an average EPS of Rs. 27.71 and average RoNW of 15.19% on a paid up equity capital of Rs. 0.50 cr. Asking price is at a P/BV of 6.18 on post bonus NAV (Average EPS stands at Rs. 1.39 on post bonus basis). P/BV stands at 2.57 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 315 which is indicating exorbitant pricing of the issue. Peers are trading at a P/E ranging from 29 to 40. Even if we take FY17 figures, then also asking price is at a P/E of 64 plus, which is pretty high.
On merchant banker’s front, this is the second mandate from its stable and the last listing opened at a premium of around 7% of the offer price, but trading at a discount currently.
Conclusion: There is no harm in giving this highly priced issue a miss. (Avoid)
Review By Dilip Davda on November 30, 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 Ratnabhumi Developers Ltd. offers an early investment opportunity in Ratnabhumi Developers Ltd.. A stock market investor can buy Ratnabhumi Developers IPO shares by applying in IPO before Ratnabhumi Developers Ltd. shares get listed at the stock exchanges. An investor could invest in Ratnabhumi Developers IPO for short term listing gain or a long term.
Read the Ratnabhumi Developers IPO recommendations by the leading analyst and leading stock brokers.
Ratnabhumi Developers IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Ratnabhumi Developers IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Ratnabhumi Developers IPO?"
Our recommendation for Ratnabhumi Developers IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Ratnabhumi Developers IPO.
The Ratnabhumi Developers IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Ratnabhumi Developers IPO allotment status to check.
