Review By Dilip Davda on September 22, 2018
• The company is in silver ornament segment
• More revenue from trading activities
• Has just two years track record
• Issue appears fully priced.
ABOUT COMPANY:
Silgo Retail Ltd. (SRL) is engaged in the business of designing, manufacturing, retailing and wholesaling of silver jewellery. It deals in silver jewellery and offers a wide variety of designs to suit the preferences of the end customers. With regional diversity of tastes and preferences, SRL has diverse portfolio of ornaments and jewellery to suit the taste and preferences of one & all and accordingly the company developed an ability to design jewellery products as per latest trends, fashion and demographic preference of the end customers. Company’s manufacturing contributes 29% of the revenue while the rest comes from trading/retailing activities.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, SRL is coming out with a maiden IPO of 1356000 equity shares of Rs. 10 each at a fixed price of Rs. 36 per share. Company mulls mobilizing Rs. 4.88 cr. through this float. Issue opens for subscription on 27.09.18 and will close on 03.10.18. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 26.77% of the post issue paid up capital of the Company.
Aryaman Financial Services Ltd. is the lead manager while Bigshare Services Pvt. Ltd. is the registrar to the issue. The company has raised equity at par and has also issued bonus shares in the ratio of 110 for 1 share held in May 2018.Average cost of acquisition of shares by the promoters is Rs. 7.03 per share. Post issue, SRL’s current paid up equity capital of Rs. 3.71 cr. will stand enhanced to Rs. 5.07 cr.
FINANCIAL PERFORMANCE:
On performance front, for last two fiscals, SRL has posted turnover/net profits of Rs. 4.98 cr. / Rs. 0.18 cr. (FY17) and Rs. 16.47 cr. / Rs. 0.95 cr. (FY19). The company has posted an average EPS of Rs. 3.08 and an average RoNW of 87.48% for last two fiscals. Issue is priced at a P/BV of 3.57 on the basis of post bonus adjusted NAV of Rs. 10.07 and at a P/BV of 2.12 on the basis of post issue NAV of Rs.17.01. If we consider FY18 earnings and attribute it on fully diluted equity then asking price is at a P/E of around 19 plus against industry average of 29, making it fully priced issue.
COMPARE WITH LISTED PEERS:
According to offer documents, it has no listed peers to compare with.
MERCHANT BANKER’S TRACK RECORD:
On merchant banker’s front, this is the 39th mandate from its stable in last four fiscal years. Out of last 10 listings, 1 opened at discount, 3 around par and the rest with premium ranging from 1 to 6% on the day of listing. Thus it has poor track record.
Issue is fully priced. The company has just two year’s track record. Cash surplus risk savvy investors may consider investment at their own risk.
Review By Dilip Davda on September 22, 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 Silgo Retail Ltd. offers an early investment opportunity in Silgo Retail Ltd.. A stock market investor can buy Silgo Retail IPO shares by applying in IPO before Silgo Retail Ltd. shares get listed at the stock exchanges. An investor could invest in Silgo Retail IPO for short term listing gain or a long term.
Read the Silgo Retail IPO recommendations by the leading analyst and leading stock brokers.
Silgo Retail IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Silgo Retail IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Silgo Retail IPO?"
Our recommendation for Silgo Retail 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 Silgo Retail IPO.
The Silgo Retail IPO allotment status will be available on or around October 8, 2018. The allotted shares will be credited in demat account by October 10, 2018. Visit Silgo Retail IPO allotment status to check.
