Review By on May 14, 2017
Yug Decor Ltd (YDL) that was primarily engaged mere trading of Laminates and plywood. In the year 2006, it had buy out manufacturing Unit (Unit I) of Water Based Adhesive and also commence the activity of and Rubber Solution/Adhesive i.e. PVA Based Adhesive, PVA Based Binder, Resin Solution and Rubber Adhesives for wood and footwear industry at Santej. In 2010 it acquired Unit II on lease basis to segregate Rubber solution/adhesive products at this unit from Unit I. Thereafter it added to the basket of manufacturing activity Lai (Starch Based Solution), Surface Coating: Melamyne and Magic Touch, Paints: Distemper, Cement Primer/Wall Primer, Emulsion, Enamel including Automotive Paints.Last year it acquired Unit III on lease to manufacture Paints and finishes.
To meet its working capital requirement, general corpus fund needs the company is coming out with a maiden IPO of 1108000 equity share of Rs. 10 each at a fixed price of Rs. 26 per share to mobilize Rs. 2.88 crore. Issue opens for subscription on 18.05.17 and will close on 23.05.17. Minimum application is to be made for 4000 shares and in multiples thereof, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Gretex Corporate Services Pvt Ltd. and Satellite Corporate Services Pvt Ltd is the registrar to the issue. This issue will constitute 26.57% of the post issue paid up capital of the company. Except for MoA equity issue at par, it has raised further equity at a price of Rs. 12 to Rs. 100 from March 2006 to October 2016 and has also issued bonus shares in the ratio of 4.5 shares for every 1 share held in August 2016. Its current paid up equity capital of Rs. 3.06 crore will stand enhanced to Rs. 4.17 crore post issue.
On performance front, the company has posted turnover/net profits of Rs. 14.21 cr. / Rs. 0.04 cr. (FY13), Rs. 14.87 cr. / Rs. 0.04 cr. (FY14), Rs. 16.69 cr. / Rs. 0.05 cr. (FY15), Rs. 17.68 cr. / Rs. 0.10 cr. (FY16). For the eight months period ended on 30.11.16 it has earned net profit of Rs. 0.16 crore on a turnover of Rs. 11.83 crore. If we annualize latest earnings and attribute it on the fully diluted post issue equity then asking price is at a P/E of around 44 plus and at a P/BV of 2.25 makes it a costly bet as its peers are trading at an average P/E of around 24. Its RoNW is also very poor.
On merchant banker’s front, this is the 3rd mandate from its stable and earlier two listing have opened at a discount on the listing day.
Conclusion: There is no harm in giving this aggressively priced issue a miss.
Review By on May 14, 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 Yug Decor Ltd. offers an early investment opportunity in Yug Decor Ltd.. A stock market investor can buy Yug Decor IPO shares by applying in IPO before Yug Decor Ltd. shares get listed at the stock exchanges. An investor could invest in Yug Decor IPO for short term listing gain or a long term.
Read the Yug Decor IPO recommendations by the leading analyst and leading stock brokers.
Yug Decor IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Yug Decor IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Yug Decor IPO?"
Our recommendation for Yug Decor IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Yug Decor IPO.
The Yug Decor IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Yug Decor IPO allotment status to check.
