Review By on June 24, 2019
ABOUT COMPANY:
S K International Export Ltd. (SKIEL) is a manufacturer and exporters in Scarves and Beachwears and catering to domestic as well as international markets. It is engaged in manufacturing of women and men's apparels like scarves, shawls, sarongs, headband, Bandanas and Beachwear in all qualities like silk, viscose, cotton, polyester, wool and other several blends. SKIEL has also entered into ethnic wears like Dupattas.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its needs for working capital (Rs. 3.01 cr.) and general corpus fund (Rs. 0.70 cr.), SKIEL is coming out with a maiden IPO of 1980000 equity shares of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 3.96 cr. The issue opens for subscription on28.06.19 and will close on 05.07.19. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 27.01% of the post issue paid up capital of the company. Company is spending Rs. 0.25 cr. for the issue process.
The issue is solely lead managed by Finshore Management Services Ltd. while Karvy Fintech Pvt. Ltd. is the registrar to the issue. Wellworth Share & Stock Broking Ltd. is acting as a Market Maker for this issue.
SKIEL has issued entire equity at par so far. The average cost of acquisition of shares by the promoters is Rs. 10 per share. Post issue SKIEL's current paid up equity capital of Rs. 5.35 cr. will stand enhanced to Rs. 7.33 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, SKIEL has posted turnover/net profits of Rs. 9.35 cr. / Rs. 0.11 cr. (FY16), Rs. 9.39 cr. / Rs. 0.34 cr. (FY17) and Rs. 9.66 cr. / Rs. 1.53 cr. (FY18). Thus while its top line remained almost static, it posted a hectic net profit for FY18 (i.e. pre-IPO year) raising concern. For the first 10 months of FY19 ended on 31.01.19, it has earned a net profit of Rs.0.39 cr. on a turnover of Rs. 8.63 cr. For the last three fiscals, it has posted an average EPS of Rs. 1.92 and an average RoNW of 23.15% due to bumper net showed for FY18. The issue is priced at a P/BV of 1.94 on the basis of its NAV of Rs. 10.33 as on 31.01.19.
However, if we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 31 against the industry average of around 28. Thus the issue is priced aggressively.
COMPARE WITH LISTED PEERS:
As per offer documents, SKIEL has shown Kewal Kiran and Jindal Worldwide as its listed peers that are currently trading at a P/Es of around 17 and 51 (as on 24.06.19). However, they are strictly not comparable.
MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's front, this is the 13th mandate from its stable in the last four fiscals. Out of the last 10 mandates 1 opened at par, 3 at discounts and the rest at premiums ranging from 1.63% to 20.67% on the day of listings.
Currently, the textile segment is not fancied by investors. The issue is priced aggressively. SKIEL has shown average financial performance so far. There is no harm in giving this issue a miss.
Review By on June 24, 2019
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 SK International Export Ltd. offers an early investment opportunity in SK International Export Ltd.. A stock market investor can buy SK International Export IPO shares by applying in IPO before SK International Export Ltd. shares get listed at the stock exchanges. An investor could invest in SK International Export IPO for short term listing gain or a long term.
Read the SK International Export IPO recommendations by the leading analyst and leading stock brokers.
SK International Export IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the SK International Export IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is SK International Export IPO?"
Our recommendation for SK International Export IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the SK International Export IPO.
The SK International Export IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit SK International Export IPO allotment status to check.
