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Comfort Commotrade Ltd IPO Review (Avoid)

While normal IPOs are still in the waiting, we have yet another BSE SME platform IPO from Comfort Commotrade Ltd. With this the SME IPO number reaches to 10 since February 2012. Details of this IPO are as under:

Comfort Commotrade Ltd. (CCL) is a Mumbai based company and promoted by Mr Anil Agrawal and his family. It is currently engaged in the business of commodity trade and has a membership at MCS and NCDEX. Under the commodity trade it offers trading in commodities such as Gold, Silver, Crude Oil, Natural Gas, Metals, Food Grains, Spices, Oil and Oil Seeds. CCL has a diversified client base that includes HNIs, retail customers, mutual fund houses, financial institutions, corporate clients and others. It also provides loans through a group company. Now it mulls expansion of its business, enhancing margin money with the exchanges and raising general corporate funds. To part finance this it is offering 6000000 equity share of Rs. 10 each at par. The offer opens for subscription on 5th September 2012 and will close on 10th September. Minimum application is to be made for 10000 shares and in multiples thereof. Thus in retail category the minimum application is for Rs. 1 lakh and the maximum for Rs. 2 lakh while in non-retail category it is minimum Rs. 2 lakh and in multiples of Rs. 1 lakh thereafter. Shares will be listed on BSE SME exchange. Issue is lead managed by VC Corporate Advisors Pvt. Ltd and Registrar to the issue is Sharepro Services India Pvt. Ltd.

With this float the paid up capital of the company will rise to Rs. 10.02 crore. Its current equity is Rs. 4.02 crore. Except the initial equity of 10000 shares, all others share were offered to promoters and their group at a price between Rs. 20 to Rs. 50 till March 2012 and in April 2012 they also issues bonus in the ratio of 2 shares for every 1 share out of premium reserves. On performance front the company has posted average EPS of Rs. 0.37 for last three fiscals ending with 31.03.12 on pre-bonus equity. On Lead Manager’s front, there is no past track record available.


Conclusion / Investment Strategy

Although we have seen speedy rise in commodity trade in past few years, it is showing declining trends in the recent past. So servicing of the hike in equity to almost three fold will be a difficult task in the near term. So only long term HNI investors can dare to park moderate fund. Because post listing too the entry level of 10000 shares will not find many buyers and thus listing gains are also limited unless some mega market operation takes place as it was seen in the case of Max Alert. All other SME listings are quoting just little over or around offer price with market making gimmicks.

Review By Dilip Davda on Aug 29, 2012

The Comfort Commotrade IPO Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered IPO Analysts tells you if Comfort Commotrade IPO worth investing. The Comfort Commotrade IPO Note sets the IPO expectations in systematic way which tells you if Comfort Commotrade IPO good to buy (good or bad / yes or no). The IPO Forecast tells you weather to invest in Comfort Commotrade IPO by providing IPO recommendations i.e. subscribe, avoid and neutral.

Review Author

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. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

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 new papers.

Email: dilip_davda@rediffmail.com


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