Review By on September 25, 2017
Tirupati Forge Ltd. (TFL) is engaged in manufacturing of closed die forged products like auto component, bearings, gears etc and forged flanges of mild steel, carbon steel, stainless steel etc. based out at Rajkot, Gujarat. The company was initially set up to cater requirements of international market mainly to US and gradually, it started exporting to Italy, Morocco etc as well as in domestic market.
To part finance its repayment of loans, working capital and general corpus fund needs, TFL is coming out with a maiden IPO of 1800000 equity share of Rs. 10 each at a fixed price of Rs. 29 per share to mobilize Rs. 5.22 crore. Issue opens for subscription on 29.09.17 and will close on 04.10.17. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Issue constitutes 30.97% of the post issue paid up equity capital of the company. After having raised initial equity at par, it issued further equity in the price range of Rs. 11 and Rs. 20 between June 2013 and August 2017. It has also issued bonus shares in the ratio of 22 shares for every 10 shares held in June 2017. Post issue, its current paid up equity capital of Rs. 4.01 crore will stand enhanced to Rs. 5.81 crore.
On performance front, TFL has reported turnover/net profits of Rs. 7.04 cr. / Rs. –(0.01) cr. (FY14), Rs. 30.37 cr. / Rs. 0.70 cr. (FY15), Rs. 18.28 cr. / Rs. 0.17 cr. (FY16) and Rs. 16.37 cr. / Rs. 0.51 cr. (FY17). TFL has posted average EPS of Rs. 1.70 and average RoNW of 17.66% for last three fiscals on an equity base of Rs. 0.79 cr. Issue is priced at a P/BV of 2.67. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 33 which is equal to industry average. Thus issue appears aggressively priced. Last two fiscals performance with declined top and bottom lines not justifying the asking price.
On merchant banker’s front, this is the 51st mandate from Pantomath in last three years. Out of last 10 recent listings, 1 opened at discount, 1 at par and the rest with 1 to 18% premium on IPO price.
Conclusion: Considering aggressive pricing, risk savvy cash surplus investors may consider investment for long term.
Review By on September 25, 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 Tirupati Forge Ltd. offers an early investment opportunity in Tirupati Forge Ltd.. A stock market investor can buy Tirupati Forge IPO shares by applying in IPO before Tirupati Forge Ltd. shares get listed at the stock exchanges. An investor could invest in Tirupati Forge IPO for short term listing gain or a long term.
Read the Tirupati Forge IPO recommendations by the leading analyst and leading stock brokers.
Tirupati Forge IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Tirupati Forge IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Tirupati Forge IPO?"
Our recommendation for Tirupati Forge 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 Tirupati Forge IPO.
The Tirupati Forge IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Tirupati Forge IPO allotment status to check.
