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Review By Dilip Davda on March 8, 2018
Benara Bearings & Pistons Ltd. (BBPL) is engaged in the manufacturing of engine bearings, bushes, pistons, piston pin, piston rings, cylinder liners and sleeves and engine valves. It is an ISO 9001:2015 company. Additionally, BBPL is also engaged in the marketing of products like ball bearings, spark plugs, rocker arms, timing chains, connecting rods, valve guides, valve seals & batteries (Motorcycle / Inverter / E Rickshaws) under own brand which it sources through third party contract manufacturing. Company markets its product in OEM and Replacement market and majorly focuses on two wheeler replacement markets.
To part finance opening of new retail stores, working capital for own and subsidiary, general corpus fund needs, BBPL is coming out with a maiden IPO of 5316000 equity shares of Rs. 10 each via book building route with a price band of Rs. 60 – Rs. 63 to mobilize Rs. 31.90 cr. – Rs. 33.49 crore based on lower and upper price bands. Issue opens for subscription on 20.03.18 and will close on 22.03.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. It has reserved 76000 shares for eligible employees. Issue constitutes approx. 30% post issue paid up capital of the company. Having issued initial equity at par since inception till March 1996, it raised further equity in the price range of Rs. 31 to Rs. 60 per share. It has also issued bonus shares in the ratio of 3 for 1 in December 2017. Post issue, its current paid up equity capital of Rs. 12.39 crore will stand enhanced to Rs. 17.71 crore. Average cost of acquisition of shares by the promoters is Rs. 8.74 and Rs. 9.52 per share.
On performance front, BBPL has (on a consolidated basis) reported turnover/net profits of Rs. 80.24 cr. / Rs. 0.76 cr. (FY16) and Rs. 122.63 cr. / Rs. 4.22 cr. (FY17). For first half of current fiscal, it has earned net profit of Rs. 4.09 cr. on a turnover of Rs. 67.25 cr. Sudden jump in net profits for FY 17 and first half of current fiscal appears as window dressing before IPO. For last three fiscals it has posted an average EPS of Rs. 3.30 and an average RoNW of 17.52%. Issue is priced at a P/BV of 3.35 on the basis of its NAV of Rs. 18.83 (consolidated) as on 30.09.17. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 14 against industry composite P/E of 32. As per offer documents, it listed peers are trading at a P/E of Shriram Piston (39), Federal Mogul (31) and Samkrg Piston (13) (as on 08.03.18).
On merchant banker’s front, this is 64th 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’s recent working raises eyebrows and is a major concern for future outlook. Although issue is priced reasonably on the basis of such superb profits, risk savvy cash surplus investors may consider investment at their own risk.
Review By Dilip Davda on March 8, 2018
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 Benara Bearings & Pistons Ltd offers an early investment opportunity in Benara Bearings & Pistons Ltd. A stock market investor can buy Benara Bearings IPO shares by applying in IPO before Benara Bearings & Pistons Ltd shares get listed at the stock exchanges. An investor could invest in Benara Bearings IPO for short term listing gain or a long term.
Read the Benara Bearings IPO recommendations by the leading analyst and leading stock brokers.
Benara Bearings IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Benara Bearings IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Benara Bearings IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Benara Bearings IPO.
The Benara Bearings IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Benara Bearings IPO allotment status to check.
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