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Review By Dilip Davda on August 30, 2017
Dhruv Wellness Ltd. (DWL) is in the business of whole selling and distributorship of general, pharmaceutical and cosmetic products. It also functions as a stockiest of medical, general cosmetics and pharmaceutical products. On January 1, 2016, it acquired the business, all the assets including debts, stock, stock-in-trade, movable plant and machinery, trade-marks, designs, patents and licenses and all credits etc. of Dhruv Agency which was in a market for about a decade and had been promoted by it.
To part finance its working capital and general corporate funds needs, DWL is coming out with a maiden IPO of 2784000 equity shares of face value of Rs. 10 each at a fixed price of Rs. 20 per equity share to mobilize Rs. 5.57 crore. Issue opens for subscription on 31.08.17 and will close on 04.09.17. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Gretex Corporate Services Pvt. Ltd and Purva Sharegistry (India) Pvt. Ltd. is the registrar to the issue. The issue will constitute 26.41% of the post issue paid up equity share capital of the company. Having issued initial equity at par it raised further equity in a price range of Rs. 55 to Rs. 60 per share from March 2016 to June 2017 and also issued bonus shares in the ratio of 4 for 1 on 28.06.17. Post issue, its current paid up equity capital of Rs. 7.76 crore will stand enhanced to Rs. 10.54 crore.
On performance front, for last two fiscals DWL has posted turnover/net profits of Rs. 22.72 cr. / Rs. 0.20 cr. (FY16), Rs. 101.94 cr. / Rs. 0.40 cr. (FY17). If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 52 plus and at a P/BV of 1.65. It has posted an average EPS of Rs. 0.48 and Ronw of 5.61% for last two fiscals. Thus issue is highly priced and performance parameters are not supportive to asking price. As claimed by the management, it has no listed peers to compare with.
On merchant banker's front, this is the 5th mandate from its stable and our of last four listings two issues opened at discount, one at par and one with mere premium.
Conclusion: Considering track record and aggressive pricing, there is no harm in giving this IPO a miss.
Review By Dilip Davda on August 30, 2017
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 Dhruv Wellness Ltd offers an early investment opportunity in Dhruv Wellness Ltd. A stock market investor can buy Dhruv Wellness IPO shares by applying in IPO before Dhruv Wellness Ltd shares get listed at the stock exchanges. An investor could invest in Dhruv Wellness IPO for short term listing gain or a long term.
Read the Dhruv Wellness IPO recommendations by the leading analyst and leading stock brokers.
Dhruv Wellness IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Dhruv Wellness IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Dhruv Wellness IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Dhruv Wellness IPO.
The Dhruv Wellness IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Dhruv Wellness IPO allotment status to check.
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