Review By on April 3, 2017
Sikko Industries Ltd (SIL) was initially engaged in the manufacturing of ―”Growth Promoters”‖ and were used as supplements in agriculture by farmers. In the blanket of Growth Promoters various products are sold namely Vakil, Diamond, Vasool, Biomono which are in combination of granules and liquid form. In addition, firm was engaged in assembling of different parts of Spray Pump having Inside and cylinder without bearing. The spray pumps are used by farmers in agriculture to sprey pesticides. In the year 2008 the Company started pesticide unit. During the year 2011 to 2016 added more new products in its basket and also ventured into fertilizer production and started seed division. In addition to manufacturing of pesticides and fertilizer, now SIL is in process of starting up of new project of Bio CNG and BIO Fertilizer for which it has applied to UP State Bio Energy Development Board, Lucknow.
To part finance its working capital and general corpus fund needs, the company is coming out with a maiden IPO of 1600000 equity share of Rs. 10 each at a fixed price of Rs.32 per share to mobilize Rs. 5.12 crore. Issue opens for subscription on 05.04.17 and will close on 07.04.17. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Issue is solely lead managed by Swastika Investmart Ltd and Purva Sharegistry (India) Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on NSE (SME) Emerge. The company raised entire equity capital till 2011 at par value and then issued bonus shares in the ratio of 1 for 1 in February 17. Post issue, its current paid up equity capital will stand enhanced from Rs. 4.00 crore to Rs. 5.60 crore.
On performance front, the company posted total turnover/net profits of Rs. 8.63 cr. / Rs. 1.17 cr. (FY13), Rs. 11.19 cr. / Rs. 1.29 cr. (FY14), Rs. 11.42 cr. / Rs. (-0.03) cr. (FY15) and Rs. 21.35 cr. / Rs. (-0.05) cr. (FY16). First seven months ended on 31.10.16 it has earned net profit of Rs. 0.61 crore on a turnover of Rs. 13.01 crore. Thus there have been erratic movements in top and bottom lines. If we annualize latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of 17 plus and at a P/BV of around 2.1 plus making it an aggressively priced issue.
On merchant banker’s front, this is the 4th mandate from its stable and earlier three mandates have given some positive returns on the listing day.
Conclusion: As issue is priced aggressively, only cash surplus risk savvy investors may consider this issue for long term.
Review By on April 3, 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 Sikko Industries Ltd. offers an early investment opportunity in Sikko Industries Ltd.. A stock market investor can buy Sikko Industries IPO shares by applying in IPO before Sikko Industries Ltd. shares get listed at the stock exchanges. An investor could invest in Sikko Industries IPO for short term listing gain or a long term.
Read the Sikko Industries IPO recommendations by the leading analyst and leading stock brokers.
Sikko Industries IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Sikko Industries IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Sikko Industries IPO?"
Our recommendation for Sikko Industries 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 Sikko Industries IPO.
The Sikko Industries IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Sikko Industries IPO allotment status to check.
