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Comfort Commotrade Ltd IPO Review - 'Avoid' says Dilip Davda

   |   Review Posted On: Aug 29, 2012

Comfort Commotrade Ltd IPO Detail

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 Managers 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.

IPO Review Author

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 (SEBI registered Research Analyst-Mumbai), 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 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.

Email: dilip_davda@rediffmail.com


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