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Max Alert Systems Ltd IPO Review - 'Avoid' says Dilip Davda

   |   Review Posted On: Jun 27, 2012

Max Alert Systems Ltd IPO Detail


Company Background

Max Alert System Ltd. : The Company is coming out with a fixed priced IPO for BSE-SME platform listing for a total size of Rs. 8 crore. The company is offering 40,00,000 equity share of Rs. 10 each at a price of Rs. 20 per share. The issue is opening for subscription on 28.06.2012 and closes on 02.07.2012. Minimum application is to be made for 6000 shares and in multiples thereof. The issue is lead managed by Comfort Securities Ltd. who will also work as market maker for this issue. For Lead Manager total of 600000 shares are reserved for subscription and the rest is being offered to public. The company that was engaged in the business of providing solutions for fire fighting, BMS and other allied activities has later on diversified into telecom industry i.e. installation of mobile towers which has yet to take off.

Now it mulls to set up crushing plant for which it is planning to mobilize the funds via this offer. Sharepro Services India Pvt Ltd. is the registrar to the issue. Listing will be done on BSE -SME platform where again the minimum entry level will be of 6000 shares for bid and offer.


Conclusion / Investment Strategy

On performance front, the company has posted net profit of Rs. 1.73 crore and 1.30 crore for the last two fiscals of 2010-11 and 2009-10 on a turnover of Rs. 33.35 crore and 28.68 crore respectively. For nine months ended 31.12.2011 it has earned net profit of Rs. 1.71 crore on a turnover of Rs. 31.31 crore. Company's weighted average EPS for last three fiscal is Rs. 3.03 and for the nine months ended 31.12.2011 is Rs. 4.37 (annualized). NAV as on 31.12.11 is Rs. 75.10 which stands reduced post bonus issue of February 2012 and post issue NAV shall be around Rs. 20.78. The company has issued bonus shares in the ratio of 5 for 2 on 31.03.2011 and 9 for 2 on 08.02.12. Although the pricing looks reasonable, considering the recent fate of SME listings, only risk aver HNI investors can consider parking of funds for long term.

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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