Review By Dilip Davda on April 30, 2016
Sagardeep Alloys Ltd. (SAL) that started its operations in the trading of SS Scrap, Copper, Aluminum, S.S. Patta and Brass etc is now engaged in the manufacturing of Copper Pipes, Flats, Coils, Rods, Plates and Copper Alloys Consumables and trading of Ferrous and Non ferrous Metals and alloys. Company’s products are industrial in nature and are utilized in various industries such as Air Conditioning and Refrigeration, Engineering & Gas Application etc. SAL’s clientele list includes some reputed Govt. undertakings, Public Sector undertakings and Engineering Giants.
To meet long term working capital requirements and other general corpus funds needs, the company is coming out with a maiden IPO of 3000000 equity share of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 6.00 crore. Issue opens for subscription on 04.05.16 and will close on 09.05.16. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Issue is solely managed by Chartered Capital and Investment Ltd and Link Intime India Pvt Ltd is the registrar to the issue. The company issued equity at par in the year 2007 and2009. In the year 2010 it issued further equity at a price of Rs.50 per share and in 2011 at a price of Rs. 62.50. On March 22, 2012 it issued bonus in the ratio of 295 for 100 and on March 29, 2012 it issued further equity at a price of Rs. 50 per share. Post IPO its current paid up equity capital of Rs. 8.37 crore will stand enhanced to Rs. 11.37 crore. Post allotment, shares will be listed on NSE SME (Emerge).
On performance front, the company has (on a standalone basis) reported turnover/net profit of Rs. 178.71 cr. / Rs. 1.88 cr. (FY12), Rs. 200.56 cr. / Rs. 0.64 cr. (FY13), Rs. 155.62 cr./ Rs. 0.66 cr. (FY14) and Rs. 132.65 cr. / Rs. 0.68 cr. (FY15). For first nine months ended 31.12.15 it has posted net profit of Rs. 0.25 crore on a turnover of Rs. 91.08 crore. If we annualize these earnings and attribute on fully diluted equity post IPO then asking price is at a P/E of 68 plus thus it is aggressively priced. Its revenue has see declining trends for past three years.
On merchant banker’s front, it appears that this is the first SME IPO. The merchant banker had no issues in last three years as stated in prospects. But this merchant banker has few main board IPOs/ right issues to its credit in the past that have shown mixed trends. Merchant banker’s website is silent on this aspect.
Considering non encouraging performance and the aggressive pricing, there is no harm in giving it a miss. However, risk savvy investors with cash surplus may consider it for long term.
Review By Dilip Davda on April 30, 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 Sagardeep Alloys Ltd. offers an early investment opportunity in Sagardeep Alloys Ltd.. A stock market investor can buy Sagardeep Alloys IPO shares by applying in IPO before Sagardeep Alloys Ltd. shares get listed at the stock exchanges. An investor could invest in Sagardeep Alloys IPO for short term listing gain or a long term.
Read the Sagardeep Alloys IPO recommendations by the leading analyst and leading stock brokers.
Sagardeep Alloys IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Sagardeep Alloys IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Sagardeep Alloys IPO?"
Our recommendation for Sagardeep Alloys IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Sagardeep Alloys IPO.
The Sagardeep Alloys IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Sagardeep Alloys IPO allotment status to check.
