Review By on September 10, 2017
Worth Peripherals Ltd. (WPL) is engaged in manufacturing of corrugated boxes. It is ISO 9001:2008 and FSC certified company enjoying consumer preference for their needs. Company’s both manufacturing units are located at Pithampur, Dhar, Indore (MP). It has fully automated plant that can have multi colour (up to 6 colours) printing. With growth in the retail, pharma, breweries, textile sectors, opportunity for growth in packaging industries has increased and thus Company aims to tap these markets for further marketing and supply. Indian packaging industry is currently valued at Rs. 85000 crore and is growing at an annual rate of 15 per cent plus. Sector is expected to be triple in next five years.
To part finance its purchase of plant and machinery, repayment of certain borrowings, working capital and general corpus fund needs, WPL is coming out with a maiden IPO of 4251000 equity share of Rs. 10 each via book building route with a price band of Rs. 40 – 43. The company plans to mobilize Rs. 17.00 to 18.28 crore (based on lower and upper price bands). Issue opens for subscription on 15.09.17 and will close on 19.09.17. 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 Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue will constitute 26.99% of fully diluted post issue paid up equity capital of the company. WPL has issued entire equity at par and has also issued bonus shares in the ratio of 1 for 1 in February 2017. Post IPO, its current paid up equity capital of Rs. 11.50 crore will stand enhanced to Rs. 15.75 crore.
On performance front, for last four fiscals, WPL has posted turnover/net profits of Rs. 84.23 cr. / Rs. 5.15 cr. (FY14), Rs. 107.78 cr. / Rs. 6.02 cr. (FY15), Rs. 127.40 cr. / Rs. 6.47 cr. (FY16) and Rs. 132.15 cr. / Rs. 7.32 cr. (FY17). The Company has been delivering consistent performance in growth with its revenue growth of more than 22% EBITDA growth of more than 18% and PAT growth of more than 20% over past 5 years. Last three fiscals average EPS is Rs.5.93, RoNW is 19.19%. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 9 plus and at a P/BV of 1.21. Thus issue is priced reasonably. It has no listed peers, as claimed in the prospectus.
On merchant banker’s front, this is the 44th mandate 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: Listed companies in packaging industry are trading at a P/E of over 62 plus. This issue appears priced reasonably. Investment may be considered for medium to long term.
Review By on September 10, 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 Worth Peripherals Ltd. offers an early investment opportunity in Worth Peripherals Ltd.. A stock market investor can buy Worth Peripherals IPO shares by applying in IPO before Worth Peripherals Ltd. shares get listed at the stock exchanges. An investor could invest in Worth Peripherals IPO for short term listing gain or a long term.
Read the Worth Peripherals IPO recommendations by the leading analyst and leading stock brokers.
Worth Peripherals IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Worth Peripherals IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Worth Peripherals IPO?"
Our recommendation for Worth Peripherals IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Worth Peripherals IPO.
The Worth Peripherals IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Worth Peripherals IPO allotment status to check.
