Review By Dilip Davda on September 12, 2017
Sri Krishna Metcom Ltd. (SKML) a Panchkanya group company is in the business of processing of non-basmati rice and basmati rice in India. According to company, it is one of the largest processors of non-basmati rice with a milling capacity of 350 Metric tons per day in the State of Jharkhand. SKML processes varieties of rice with the help of state of the art plant and machinery of International Standards i.e. Automatic Ultra Modern State of Art Buhler’s Swiss Technology Rice Mill. Company sells its products under the brand names ‘BABA’, ‘PANCHAKANYA’, ‘SINGHAM’ and MIDDU BHAI’ that are well accepted for their quality and standard in the market across Eastern India. Presently, it is also doing job work for other rice traders.
To part finance its working capital and general corpus fund needs, SKML is coming out with a maiden IPO of 3500000 equity share of Rs. 10 each at a fixed price of Rs. 55 per share to mobilize Rs. 19.25 crore. Issue consists of 600000 fresh equity issue and 2900000 shares by offer for sale. It opens for subscription on 14.09.17 and will close on 18.09.17. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The offer will constitute 26.45% of the post offer paid up equity share capital of the company. Issue is solely lead managed by Microsec Capital Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Its entire equity so far is issued at par. Post issue, its current paid up equity capital of Rs. 12.63 crore will stand enhanced to Rs. 13.23 crore.
On performance front, SKML has posted turnover/net profits of Rs. 24.22 cr. / Rs. – (1.60) cr. (FY14), Rs. 79.03 cr. / Rs. 0.88 cr. (FY15), Rs. 81.04 cr. / Rs. 0.86 cr. (FY16) and Rs. 82.11 cr. / Rs. 1.03 cr. (FY17). Last three fiscal’s top line and bottom line is almost stagnant. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 70 plus (against Industry’s composite P/E of 40). Last three year’s average EPS is 0.75 and average RoNW is 7.18. Issue is priced at a P/BV of 5 plus. Thus IPO is priced aggressively.
On merchant banker’s front, it has no track record. This is the first mandate from its stable.
Conclusion: Considering aggressive pricing, there is no harm in giving this issue a miss.
Review By Dilip Davda on September 12, 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 Sri Krishna Metcom Ltd. offers an early investment opportunity in Sri Krishna Metcom Ltd.. A stock market investor can buy Sri Krishna Metcom IPO shares by applying in IPO before Sri Krishna Metcom Ltd. shares get listed at the stock exchanges. An investor could invest in Sri Krishna Metcom IPO for short term listing gain or a long term.
Read the Sri Krishna Metcom IPO recommendations by the leading analyst and leading stock brokers.
Sri Krishna Metcom IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Sri Krishna Metcom IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Sri Krishna Metcom IPO?"
Our recommendation for Sri Krishna Metcom IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Sri Krishna Metcom IPO.
The Sri Krishna Metcom IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Sri Krishna Metcom IPO allotment status to check.
