Review By on September 11, 2014
Ultracab India is engaged in the manufacturing and selling in domestic market as well as exporting of wires and cables. Currently it exports its products to countries like UK, UAE, Africa, Singapore, Uganda etc. It also offers customized products as per requirement of user industry. It manufactures various ranges of cables and wires.
Now to part finance its working capital requirements, the company is coming out with an equity issue of 2214000 equity shares of Rs. 10 each at a fixed price of Rs. 36 per share to mobilize Rs. 7.97 crore. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment shares will be listed on BSE SME. Issue is lead managed by Pantomath Capital Advisors Pvt Ltd and Bigshare Services Pvt Ltd is the registrar to the issue. Issue opens for subscription on 15.09.14 and will close on 23.09.14. Its current equity is Rs. 5.80 crore that will rise to Rs. 8.01 crore post issue. Company raised equity with preferential issue during March 2011 to July 2014 at a price ranging between Rs. 20 to Rs. 36 and issued bonus shares in August 2014 in the ratio of 1 share for every 1 share held.
On performance front, the company has posted rising pattern of turnover and profits for past five years. Its turnover rose from Rs. 10.66 crore in 2009-10 to Rs. 28.84 crore in 2012-13 and net profit marked rising trends from 2009-10 to 2011-12 from Rs. 0.15 crore to Rs. 0.28 crore and was down to Rs. 0.22 crore for 2012-13. However, for the fiscal 2013-14 it has earned net profit of Rs. 0.83 crore on a turnover of Rs. 31.81 crore marking huge jump in bottom line. If we attribute these earnings on enhanced equity post issue then the asking price is at a P/E of 34 which is very high. Its peers are trading at a P/E around or below 20.
SME investment is having entry barrier at entry and trading levels and many broking houses discourage marketing, recommendation and trading or deals on SME counters. Thus SME investment carries these additional blockades.
On merchant banker’s front, in past two mandates they have given marginal listing gains and currently quoting at better yields. Considering these, risks aver investors having surplus funds can park their money for medium to long term rewards. Others can just avoid it.
(Disclaimer: Author has no plans to invest in this IPO)
Review By on September 11, 2014
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 Ultracab (India) Ltd. offers an early investment opportunity in Ultracab (India) Ltd.. A stock market investor can buy Ultracab IPO shares by applying in IPO before Ultracab (India) Ltd. shares get listed at the stock exchanges. An investor could invest in Ultracab IPO for short term listing gain or a long term.
Read the Ultracab IPO recommendations by the leading analyst and leading stock brokers.
Ultracab IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Ultracab IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Ultracab IPO?"
Our recommendation for Ultracab IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Ultracab IPO.
The Ultracab IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Ultracab IPO allotment status to check.
