Review By on March 21, 2018
Vera Synthetics Ltd. (VSL) is engaged in manufacturing of Fishing Nets, PP Yarns, PP/HDPE Ropes, PP Twines and Niwar. Company manufactures and market its products under our flagship brand “Sujlon” and are primarily used in fishing sector and other allied use thereon.Its manufacturing facility is divided into two units namely Division I and Division II (both situated in the same premises at Mamsa, Gujarat).
At present VSL caters majorly to domestic markets with its dealers, traders and distributors spread across different regions of the Country thus giving the advantage of widespread geographical presence. Currently it sells products either directly to traders/fishermen or through distribution network in Gujarat, Maharashtra, Kerala, Karnataka, Andhra Pradesh, Punjab, Tamil Nadu, Haryana, Uttar Pradesh, Delhi, Rajasthan, etc. It has recently ventured into export markets.
To part finance its working capital and general corpus fund needs, VSL is coming out with a maiden IPO of 1335000 equity shares of Rs. 10 each with a fixed price of Rs. 40 per share to mobilize Rs. 5.34 crore. Issue opens for subscription on 28.03.18 and will close on 04.04.18. Minimum application is to be made for 3000 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 27.05% of the post issue paid up capital of the company. It has issued entire equity at par and has also issued bonus shares in the ratio of 1 for 1 in October 2017. Average cost of acquisition of shares by the promoters is Rs. 0.44 and Rs. 2.19 per share. Post issue, its current paid up equity capital of Rs. 3.60 cr. will stand enhanced to Rs. 4.94 cr.
On performance front, VSL has posted turnover/net profits of Rs. 19.76 cr. / Rs. 0.33 cr. (FY14), Rs. 24.49 cr. / Rs. 0.05 cr. (FY15), Rs. 21.95 cr. / Rs. 0.27 cr. (FY16) and Rs.18.44 cr. / Rs.0.34 cr. (FY17). For first half of the current fiscal, it has incurred loss of Rs.-(1.03) cr. on a turnover of Rs. 9.72 cr. Thus while it has inconsistency in performance with declining trends in top line, it has posted huge loss for first half of the current fiscal, which might wipe out last five years earnings. For last three fiscals, it has posted an average EPS of Rs.0.75 and an average RoNW of 5.81%. For first half, it has posted a negative EPS of Rs.-(2.86) and negative RoNW – (27.25%). Issue is priced at a P/BV of 3.81 on the basis of NAV of Rs.10.51 as on 30.09.17 and at a P/BV of 2.16 on the basis of its post issue NAV of Rs. 18.49. Due to negative earnings, P/E will be negative. It has shown Garware Wall as its listed peer that is trading at a P/E of around 21 (on BSE as on 21.03.18 closing).
On merchant banker’s front, this is 66th mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened at discount to offer price, 1 just Rs. 0.05 paise up on offer price, 7 with a premium ranging from 4% to 20% and 1 (main board issue) with a premium of 130% on the offer price on the day of listing.
Company has inconsistent performance and has made loss for first half of current fiscal. Issue pricing is exorbitant. There is no harm in giving this issue a miss.
Review By on March 21, 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 Vera Synthetic Ltd. offers an early investment opportunity in Vera Synthetic Ltd.. A stock market investor can buy Vera Synthetic IPO shares by applying in IPO before Vera Synthetic Ltd. shares get listed at the stock exchanges. An investor could invest in Vera Synthetic IPO for short term listing gain or a long term.
Read the Vera Synthetic IPO recommendations by the leading analyst and leading stock brokers.
Vera Synthetic IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Vera Synthetic IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Vera Synthetic IPO?"
Our recommendation for Vera Synthetic IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Vera Synthetic IPO.
The Vera Synthetic IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Vera Synthetic IPO allotment status to check.
