Review By on March 4, 2016
Relicac Cable Manufacturing Ltd (RCM) is engaged in the business of manufacturing and marketing of PVC Compounds and Wires and Cables and has successfully developed a wide base of business network and marked its presence in this industry since over 15 years. RCM is involved in manufacturing a complete array of wires and cables that are used in diverse sectors encompassing virtually all industries like telecom, electrical, automotive and household appliances and the new field of wind energy. Its product range includes a wide range of wires and cables including armored / unarmored and single core as well as multi core flexible cables, control & power cables, instrumentation cables etc. using high quality copper wires in HR, FR, FRLS, ZHFR forms and other raw materials. It has as part of its backward integration initiative; an in-house PVC Compound manufacturing facility which supplies compound raw material for Wires and Cables manufacturing business as well as being sold directly as finished goods to other users of PVC Compound. RCM offers all types of PVC Compounds
To part finance its Technological modifications and certain augmentations in the factory, Long Term Working Capital, Refundable Security Deposit for Factory Premises and meeting General Corporate funds requirement, the company is coming out with a maiden IPO for 1608000 equity share of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 3.22 crore. Issue opens for subscription on 09.03.16 and will close on 14.03.16. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Issue is lead managed by Aryaman Financial Services Ltd and Sharex Dynamic India Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE SME.
On performance front, the company has posted an average EPS of Rs. 0.76 for last three fiscals. Its turnover has seen declining trends from FY 2012 to FY 2014 and has been static for FY 2015. Its bottom line has seen erratic movements with ups and down for these years. To be precise its turnover and net profits from FY 2011 to FY 2015 were Rs. 15.65 cr./Rs. 0.04 cr., Rs. 15.84 cr./Rs. 0.07 cr., Rs. 12.02 cr. / Rs. 0.03 cr., Rs. 11.15 cr. / Rs. 0.06 cr. and Rs. 11.94 cr. / Rs. 0.14 cr. Sudden surge in bottom line for FY 2015 is surprising. For first half of current fiscal it has earned net profit of Rs. 0.08 crore on a turnover of Rs. 7.30 crore. If we annualize these earnings and attribute on fully diluted equity post IPO then asking price is at a P/E of 57 and P/BV of around 2. P/E is very high compared to industry average of 20.
Since inception till March 2015 it has issued all equity shares at par value and a bonus in the ratio of 24 shares for every 100 shares. Cost of acquisition by promoters is around Rs. 9 per share. Its current paid up equity capital of Rs. 2.97 crore will stand enhanced to Rs. 4.58 crore post this issue.
On merchant banker’s front, it has poor track records. This is the 12th IPO from their stable.
Issue is priced aggressively and the track record is not supporting. There is no harm in giving it a miss.
Review By on March 4, 2016
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 Relicab Cable Manufacturing Ltd. offers an early investment opportunity in Relicab Cable Manufacturing Ltd.. A stock market investor can buy Relicab Cable Manufacturing IPO shares by applying in IPO before Relicab Cable Manufacturing Ltd. shares get listed at the stock exchanges. An investor could invest in Relicab Cable Manufacturing IPO for short term listing gain or a long term.
Read the Relicab Cable Manufacturing IPO recommendations by the leading analyst and leading stock brokers.
Relicab Cable Manufacturing IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Relicab Cable Manufacturing IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Relicab Cable Manufacturing IPO?"
Our recommendation for Relicab Cable Manufacturing IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Relicab Cable Manufacturing IPO.
The Relicab Cable Manufacturing IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Relicab Cable Manufacturing IPO allotment status to check.
