Dilip Davda says 'Avoid' to VKS Projects Ltd IPO
Date Posted: Jun 27, 2012
VSK Projects Ltd.: The Company is an EPC contractor and is now planning to procure construction equipments and key machinery for its business model as also setting up of engineering design studio and training centres at Chennai, Cochin, Delhi, Hyderabad and Ahmedabad. For meeting funding for this plans and other general corpus fund, it is offering (*) equity shares of Rs. 10 each within a price band of Rs. 55-60 to mobilize around Rs. 55 crore. The issue is opening on 29.06.12 and will close on 04.07.2012. Minimum application is to be made for 100 shares and in multiples thereof. Aryaman Financial Services Ltd. is the sole BRLM for this offer and Bigshare Services Pvt. Ltd. is the registrar to the issue. Shares will be listed on BSE and NSE post allotment. This IPO has been graded IPO Grade 1 by CRISIL indicating poor fundamentals of the company. As on 31.12.2011 the order book of the company stood at Rs. 98.25 crore.
Conclusion / Investment Strategy
On performance front, for last two fiscals the company reported Total turnover/ net profit of Rs 60.25 crore/3.16 crore (2010-11) and Rs. 30.24 crore/Rs. 2.00 crore (2009-10) respectively. For the nine months ended 31.12.2011 it has earned net profit of Rs. 5.63 crore on a turnover of Rs. 97.55 crore. In December 2010 it issued bonus shares in the ratio of 4 shares for every 1 share held. Last three fiscal's average EPS stands at Rs. 8.49 and for nine month period at Rs. 7.03 and NAV of Rs. 23.09 per share. These EPS gets diluted on enhanced equity post this issue and thus issue looks fully priced. BRLM's track record is poor. Lower IPO grading also makes it a risky bet, hence avoid.
IPO Review Author
About Dilip Davda
Dilip Davda, a freelance journalist for more than 25 years, is a stock market analyst and news article writer. Since 1985, he has contributed to print media, electronic media and often appears on TV channels as visiting stock analyst. His articles are regularly publishes in Corporate India, Smart Investment (English and Gujarati weekly published from Ahmedabad), Free Press Journal and many other news papers & magazines. He is also a visiting stock analyst on DD News TV Channel.