Review By on July 27, 2018
* Saketh has manufacturing and trading activities
* Diluting around 27.23% equity at a price of Rs. 69 per share
* Asking price is at around 32 P/E
* No harm in avoiding this exorbitantly priced IPO.
About the company:
Saketh Exim Ltd. (SEL) is engaged in the manufacturing and fabrication of various steel products which are meant for its application in pipe support system, HVAC system, Anti vibration system and equipments for industrial, commercial, utility and OEM installations. Product portfolio includes G.I. Nuts, various types of bolts, clamps, hangers, all types of bathroom pipes, fittings, bathroom accessories, sanitary wares etc. For the fiscal 2017-18, Company’s revenue from manufacturing activities was 61.22% and from trading activities was 38.78%. SEL trades in textile products. Its all three manufacturing units are located at Vashi, Navi Mumbai.
Issue details:
To part finance its working capital and general corpus fund needs, SEL is coming out with a maiden IPO of 1368000 equity shares of Rs. 10 each at a fixed price of Rs. 69 per share to mobilize Rs. 9.44 crore. Issue comprises of offer for sale of 245000 equity shares and fresh issue of 1123000 equity shares. It opens for subscription on 01.08.18 and will close on 03.08.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 27.23% of the post issue paid up capital of the company. Issue is solely lead managed by Aryaman Financial Services Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue.
Capital history:
Having issued initial equity at par, SEL raised further equity at a price of Rs. 20.83 and Rs. 26 per share. It has also issued bonus shares in the ratio of 1 for 2 in March 2018. Average cost of acquisition of shares by the promoters is Rs. 1.40, Rs. 4.84, Rs. 6.33 and Rs. 17.61 per share. Post issue, SEL’s current paid up equity capital of Rs. 3.90 cr. will stand enhanced to Rs. 5.02 cr.
Financial performance:
On financial performance front, for last four fiscals, SEL has posted turnover/net profits of Rs. 37.49 cr. / Rs. 0.40 cr. (FY15), Rs. 46.72 cr. /Rs. 0.77. Cr. (FY16), Rs. 51.40 cr. /Rs. 0.96 cr. (FY17) and Rs. 62.00 cr. /Rs. 1.07 cr. (FY18). Thus there has been gradual growth in top and bottom lines. For last three fiscals, it has posted an average EPS of Rs. 2.87 and an average RoNW of 16.93%. Issue is priced at a P/BV of 3.67 on the basis of its NAV of Rs. 18.78 as on 31.03.18 and at a P/BV of 2.26 on the basis of post issue NAV of Rs. 30.53. Its debt ratio is around 2.63. If we attribute latest earnings on the post issue equity then asking price is at a P/E of around 32 against industry composite of 13.90. Thus it is priced very aggressively. As per offer documents, it has no listed peers to compare with.
Lead manager track record:
On merchant banker’s front, as per offer document, this is the 36th mandate from its stable in last four fiscals. Out of last 10 listings, 2 opened at discount, 2 around par and the rest with a premium ranging from 0.75% to 6% on the day of listing. Thus it has poor track record.
Although company has been reporting gradual growth in its top and bottom lines for last five fiscals, very aggressive pricing is the major concern. There is no harm in giving this exorbitantly priced issue a miss.
Review By on July 27, 2018
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 Saketh Exim Ltd. offers an early investment opportunity in Saketh Exim Ltd.. A stock market investor can buy Saketh Exim IPO shares by applying in IPO before Saketh Exim Ltd. shares get listed at the stock exchanges. An investor could invest in Saketh Exim IPO for short term listing gain or a long term.
Read the Saketh Exim IPO recommendations by the leading analyst and leading stock brokers.
Saketh Exim IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Saketh Exim IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Saketh Exim IPO?"
Our recommendation for Saketh Exim IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Saketh Exim IPO.
The Saketh Exim IPO allotment status will be available on or around August 8, 2018. The allotted shares will be credited in demat account by August 10, 2018. Visit Saketh Exim IPO allotment status to check.
