Review By on October 1, 2013
Subh Tex (India) Ltd is an ISO 9001:2008 certified organization which manufactures suitings and shirtings. The company also exports finished suitings to various countries in the Middle East region and trades in various materials (semi-finished and finished products) in the textile market. STIL set up a yarn-dying unit at Vapi, Gujarat. However, due to intense competition and viability issues, the said unit was shut down in the year 1998. In the meantime, during the year 1997, it started Fabric Weaving unit (Unit I) at 277/1/2, Demni Road, Dadra, Dadra & Nagar Haveli (Union Territory) with 36 Sulzer-make powerlooms. Unit I had a capacity to manufacture 1.08 lac meters of textile material per month.
In the year 2002 Company started operations in its second unit for Fabric Weaving (Unit II) at Plot No. 18, Village Dadra, Dadra & Nagar Haveli (Union Territory) by installing 40 Sulzer-make power looms. In July 2012 STIL shifted its entire machinery of Unit I to Unit II. Currently it has a single unit for the manufacturing of grey fabric with an installed capacity of 2.29 Lacs mtrs/month. Currently, the company is engaged in the business of manufacturing fabric viz suiting & shirting for the domestic and international market. At the same time it is involved in trading of various textile products which are of high quality and also bulk trading. These textile goods are in demand and give us an income over and above the manufacturing activity.
To finance its working capital requirements, the company is offering 3500000 equity shares of Rs. 10 each at par. The issue opens on 30.09.13 and will close on 07.10.13. Minimum application is to be made for 10000 shares and in multiples thereof, thereafter. Post issue shares will be listed on BSE SME. Issue is solely lead managed by unknown merchant banker from Hyderabad i.e. Basan Financial Services Ltd. And the registrar to the issue is Sharepro Services India Pvt. Ltd. Post issue shares will be listed on BSE SME.
Although issue is opening on 30.09.13, we do not find final prospectus on any web i.e. BSE, SEBI, Basan or even company's own web while writing this analysis on Saturday morning and thus the analysis is based on draft prospectus which contains older financial numbers. In 2004, the company issued bonus shares in the ratio of 2 shares for every 1 share held. For last three fiscals (2010-2012) it posted average EPS of Rs. 0.49. For first ten months ended 31.1.13 it marked net profit of Rs. 0.18 crore on a turnover of Rs. 45.13 crore, this translates in an annualized EPS of Rs. 0.03 on present equity of Rs. 7.50 crore which will rise to Rs. 11 crore post issue. Thus the asking price on fully diluted equity is at a P/E of 500 and thus even at par offer with entry barrier is not worth.
As this is being the first IPO from Basan Financial from Hyderabad we have no track records.
Review By on October 1, 2013
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 Subh Tex (India) Ltd. offers an early investment opportunity in Subh Tex (India) Ltd.. A stock market investor can buy Subh Tex IPO shares by applying in IPO before Subh Tex (India) Ltd. shares get listed at the stock exchanges. An investor could invest in Subh Tex IPO for short term listing gain or a long term.
Read the Subh Tex IPO recommendations by the leading analyst and leading stock brokers.
Subh Tex IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Subh Tex IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Subh Tex IPO?"
Our recommendation for Subh Tex IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Subh Tex IPO.
The Subh Tex IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Subh Tex IPO allotment status to check.
