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Review By Dilip Davda on July 25, 2014
Vishal Fabrics Ltd: Vishal Fabrics Limited (VFL) is a flagship Company of Chiripal Group, Ahmedabad and is recognized as a leading process house with a capacity to produce 100 million meter processed fabric per annum. The Company is engaged in the business of dyeing, printing and processing of fabrics of its own and also on job work basis. The Company procures mainly Grey Fabric and dyes, prints and finishes the same as per the client’s requirements. The processing unit of the Company is based in Narol, Ahmedabad, Gujarat. The plant has the capacity to print, dye and process wide range of fabrics i.e. cotton, polyester, viscose and man-made & blended fabrics suitable for men’s wear, women’s wear, home furnishing and many other applications.
To meet its long term funding requirement the company is coming out with a maiden IPO of 3474000 equity share of Rs. 10 each at a fixed price of Rs. 45 per share to mobilize Rs. 15.63 crore. The issue opens for subscription on 31.07.14 and will close on 05.08.2014. Minimum application is to be made for 3000 shares and in multiples thereof, thereafter. Issue is lead managed by Aryaman Financial Services Ltd and Link Intime India Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE SME.
On performance front, VFL has posted an average EPS of Rs. 1.92 for last three fiscals ended 31.3.13. For first nine months ended 31.12.13 it has earned net profit of Rs. 2.12 crore on a turnover of Rs. 136.59 crore. If we attribute this earnings on expanded equity of Rs. 13.17 crore, then the asking price is at a P/E of around 21 against peers quoting below 5 P/E. Company’s equity shares was having face value of Rs. 100 till January 2014 and it made preferential issue of 2100 shares at a price of Rs. 300 per share in September 1998, 40000 shares at a price of Rs. 700 in May 2003, 10000 shares at a price of Rs. 2000 per share in March 2005, 5000 shares at a price of Rs. 2100 in November 2007 and then issued two bonus in the ratio of 3 for 1 in January 2014 and 1 for 1 in March 2014. In March 2014 it issued 500000 shares at a price of Rs. 45 to promoters to pave the way for pricing of this IPO, which is very aggressive.
Lead manager has poor track record.
Remark: Avoid this pricy issue that also has entry barriers.
Review By Dilip Davda on July 25, 2014
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Vishal Fabrics Ltd offers an early investment opportunity in Vishal Fabrics Ltd. A stock market investor can buy Vishal Fabrics IPO shares by applying in IPO before Vishal Fabrics Ltd shares get listed at the stock exchanges. An investor could invest in Vishal Fabrics IPO for short term listing gain or a long term.
Read the Vishal Fabrics IPO recommendations by the leading analyst and leading stock brokers.
Vishal Fabrics IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Vishal Fabrics IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Vishal Fabrics IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Vishal Fabrics IPO.
The Vishal Fabrics IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Vishal Fabrics IPO allotment status to check.
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