Olympic Cards Ltd. (OCL) is a 50 year old company and currently enjoying Numero Uno status in south in Wedding cards segment. It has over 53% of its total revenue coming from Wedding cards business and rest from Greeting Cards, Envelopes, Calendars, Business Cards, Notebooks etc.
Now the company is setting up a new state of the art unit for Wedding Cards manufacturing and also mulls setting up of own retail outlets and appointing franchises. To part finance the said programmer, the company is offering equity share of Rs. 10 each within a price band of Rs. 30-32 to mobilize Rs. 25 crore. From this, approximately Rs. 20 crore will go for new unit, Rs. 3 crore for enhancing its own retail outlets to 10 from 6 and the rest for other corpus funds. Issue opens for subscription on 09.03.2012 and will close on 13.03.2012. Minimum application is to be made for 200 shares and in multiples thereof thereafter. The issue is lead managed by Ashika Capital Ltd. And registrar to the issue is Cameo Corporate Services Ltd. CRISIL has assigned "IPO Grade 1" to this offer indicating at poor fundamentals of the company. Post issue the shares will be listed only on BSE. This issue represents around 48% dilution of the enhanced equity.
As far as sole BRLM is concerned, out of four IPOs it brought in the past only 2 IPOs managed to reward investors on the debut day. Thus the ratio of success is very poor. Despite this, greed for aggressive pricing is still adhere too.
OCL has posted an average EPS of Rs. 2 for past three years. For the first nine months of the current fiscal it has earned net profit of Rs. 1.93 crore on a turnover of Rs. 32.73 crore. These translate into a P/E of 20 plus on the fully diluted equity post this issue. Although the company claims that the peer industry that are trading at and around 10 P/E are not falling in line of production that OCL has.
Aggressive pricing of the IPO makes it a bet only for the risk aver investors to park moderate funds for listing gains, if any.
Review By Dilip Davda on Mar 5, 2012
The Olympic Cards 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 Olympic Cards IPO worth investing. The Olympic Cards IPO Note sets the IPO expectations in systematic way which tells you if Olympic Cards IPO good to buy (good or bad / yes or no). The IPO Forecast tells you weather to invest in Olympic Cards IPO by providing IPO recommendations i.e. subscribe, avoid and neutral.
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. Any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.
(SEBI registered Research Analyst-Mumbai).
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 new papers.
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