Review By on September 25, 2018
• SPL is engaged in the field of technical yarn.
• It has posted super performance for FY18; sustainability of the same is a concern.
• This is the 2nd mandate from LM. First one yet to be listed.
• Issue appears fully priced. May be considered for long term.
ABOUT COMPANY:
Shubham Polyspin Ltd. (SPL) is engaged in the manufacturing of Polypropylene (PP) multifilament yarn. This yarn offer compact and flexible solutions for varied applications. Such high tenacity air intermingled yarns is used for sewing threads, webbings & slings, braids & ropes and other variety of technical textiles. Currently the company has overall installed capacity of 250 MT/month for this yarn and is being marketed under the brand name 'Shublon'.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans of modernization of plant and machinery, development of new products, working capital and general corpus fund needs, SPL is coming out with a maiden IPO of 1500000 equity shares of Rs. 10 each at a fixed price of Rs. 40 per share to mobilize Rs. 6.00 cr. Issue opens for subscription on 28.09.18 and will close on 04.10.18. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 27.22% of the post issue paid up capital of the company. Issue is solely lead managed by Beeline Broking Ltd. while Link Intime India Pvt. Ltd. is the registrar to the issue. SPL has issued entire capital at par so far. Average cost of acquisition of shares by the promoters is Rs. 10 per share. Post issue, SPL’s current paid up capital of Rs. 4.01 cr. will stand enhanced to Rs. 5.51 cr.
FINANCIAL PERFORMANCE:
On performance front, for last four fiscals, SPL has posted turnover/net profits of Rs. 13.55 cr. / Rs. 0.20 cr. (FY15), Rs. 15.40 cr. / Rs. 0.25 cr. (FY16), Rs. 17.71 cr. / Rs. 0.22 cr. (FY17) and Rs. 28.27 cr. / Rs. 1.48 cr. While it suffered a setback on bottom line for FY17, jump in top and bottom line for FY18 is a bit surprising. It has been showing around 88% capacity utilization of its total installed capacities for all these years. For last three fiscals, it has posted an average EPS of Rs. 2.23 and an average RoNW of 14.74%. Issue is priced at a P/BV of 2.60 based on its NAV of Rs. 15.37 as on 31.03.18, and at a P/BV of 1.81 based on post issue NAV of Rs. 22.08. If we consider FY18 super earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 15. Thus issue appears fully priced. Sustainability of super performance of FY18 is a concern.
PEERS COMPARISION:
As per offer documents, it has shown Garware Technical as its listed peers that is currently trading at a P/E of around 22 (as on 25.09.18). Garware Technical is not strictly comparable with SPL on product line basis.
MERCHANT BANKER’S TRACK RECORD:
On merchant banker’s front, this is 2nd mandate from its stable and the first mandate is to be listed shortly. Thus no track record for past mandate listing is available.
Issue appears fully priced on the given financial data. Cash surplus investors may consider investment for long term.
Review By on September 25, 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 Shubham Polyspin Ltd. offers an early investment opportunity in Shubham Polyspin Ltd.. A stock market investor can buy Shubham Polyspin IPO shares by applying in IPO before Shubham Polyspin Ltd. shares get listed at the stock exchanges. An investor could invest in Shubham Polyspin IPO for short term listing gain or a long term.
Read the Shubham Polyspin IPO recommendations by the leading analyst and leading stock brokers.
Shubham Polyspin IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Shubham Polyspin IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Shubham Polyspin IPO?"
Our recommendation for Shubham Polyspin IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Shubham Polyspin IPO.
The Shubham Polyspin IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Shubham Polyspin IPO allotment status to check.
