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Review By MLR Securities Private Ltd on May 2, 2011
Issue Date: 29th April - 3rd May
Price Range: INR 45-49
Issue Size: INR 45-49 Cr
Mcap: INR 106 -115 Cr
Grey Market Premium: INR 4-4.5
IPO Grading: ICRA IPO Grade 2
Promoter Holding: 57.43% (Post Issue)
BRLM: Ashika Capital Ltd
Vaswani Industries incorporated in 2003 is into integrated manufacturing of Sponge Iron, Steel Billets & Ingots and power generation mostly for captive consumption. VIL currently has installed capacities of 90,000 TPA, 36,000 TPA and 11.5 Mega Watt (MW) to produce coal based sponge iron, billet and power respectively.
The company is raising Rs 45-49 Cr depending on the price discovered for pre-payment of term loan of Rs 25 Cr and to meet working capital requirements of Rs 19 Cr.
The promoters Mr. Ravi Vaswani and Mr. Pramod Vaswani have about two decades of experience in the steel business. They are also the founding members of the Vaswani Group, which is involved in steel manufacturing and castings business through three group entities apart from VIL viz. C.G Ispat Private Limited, Cosmos Castings (India) Limited and Kwality Foundry Industries.
Investment Rationale
The company is asking for a P/E of 23-25 times its FY11 annualized EPS which is very expensive compared to peers like Godawari Power and MSP Steel & Power. Considering its small size of operations, weak fundamentals and expensive valuations we recommend investors to AVOID the issue.
Review By MLR Securities Private Ltd on May 2, 2011
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