Review By Dilip Davda on July 18, 2018
Ushanti Colour Chem Ltd. (UCCL) is in the business of manufacturing and trading of various colours of dyestuffs. Having received permission for manufacturing of CPC Blue Crude dyestuff and witnessing its growing demand, UCCL ventured into it. Company’s product portfolio includes Synthetic Organic Dyes, Copper Phthalocyanine, Blue cued. These products caters to the requirements of textile, garment, cotton, leather, nylon, paper, wool, ink, wood, plastic and pain industries. UCCL mainly focuses on 'Turquoise Blue' dyestuffs and pigments. In the process, company recovers Ammonium Carbonate that is being reused in the plant as well as sold to Soda Ash industry. UCCL has domestic share of 46% and exports of 54% of its total sales. Company is exporting its products to over 16 countries that includes UK, US, Argentina, China, Korea etc.
To part finance setting up of dyestuff pigment and intermediates manufacturing facility at GIDC – Bharuch, repayment/prepayment of certain secured borrowings and general corpus fund needs, UCCL is coming out with a maiden IPO of 1926000 equity shares of Rs. 10 each at a fixed price of Rs. 60 per share to mobilize Rs. 11.56 cr. Issue opens for subscription on 23.07.18 and will close on 25.07.18. Minimum application is to be made for 2000 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. Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.38% of the post issue paid up capital of the company. Having raised initial equity at par, it raised further equity in the price range of Rs. 160 and Rs. 500 per share and has also issued bonus shares in the ratio of 3 for 2 in February 2007 and 10 for 1 in March 2018. Average cost of acquisition of shares by the promoters is Rs. 1.04 per share. Post issue, UCCL’s current paid up equity capital of Rs. 5.38 cr. will stand enhanced to Rs. 7.30 cr.
On performance front, for last five fiscals, UCCL has posted turnover/net profits of Rs. 35.42 cr. / Rs. 2.12 cr. (FY14), Rs. 29.71 cr. / Rs. 0.25 cr. (FY15), Rs. 25.11 cr. / Rs. 0.26 cr. (FY16), Rs. 29.62 cr. / Rs. 1.28 cr. (FY17) and Rs. 36.75 cr. 2.39 cr. (FY18). It suffered set back in top and bottom lines for FY15 and FY16 and thereafter has marked steady growth in both. For last three fiscals, it has posted an average EPS of Rs. 3.09 and an average RoNW of 21.29%. Issue is priced at a P/BV of 3.71 on the basis of its NAV of Rs. 16.18 as on 31.03.18 and at a P/BV of 2.16 on the basis of post issue NAV of Rs. 27.74. If we attribute FY18 on post issue equity then asking price is at a P/E of around 18 against industry average of 46. As per offer documents, it has shown Meghmani Org., Yash Chemex and Mahickra Chemicals as its listed peers that are currently trading at a P/E of around 9, 61 and 229. Although listed peers are not strictly comparable with the company, issue appears reasonably priced. Company is clearing debt of Rs. 5.80 crore that will bring sizeable savings in finance cost for the company going forward.
On merchant banker’s front, this is 80th mandate from its stable in last four fiscals. Out of last 10 listings, 1 opened at par and the rest with marginal premiums to 10% premium on the day of listing.
Considering reasonable pricing and expansion plans and reduction in debts, investment for medium to long term may be considered.
Review By Dilip Davda on July 18, 2018
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 Ushanti Colour Chem Ltd. offers an early investment opportunity in Ushanti Colour Chem Ltd.. A stock market investor can buy Ushanti Colour Chem IPO shares by applying in IPO before Ushanti Colour Chem Ltd. shares get listed at the stock exchanges. An investor could invest in Ushanti Colour Chem IPO for short term listing gain or a long term.
Read the Ushanti Colour Chem IPO recommendations by the leading analyst and leading stock brokers.
Ushanti Colour Chem IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Ushanti Colour Chem IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Ushanti Colour Chem IPO?"
Our recommendation for Ushanti Colour Chem IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Ushanti Colour Chem IPO.
The Ushanti Colour Chem IPO allotment status will be available on or around July 30, 2018. The allotted shares will be credited in demat account by August 1, 2018. Visit Ushanti Colour Chem IPO allotment status to check.
