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VKS Projects Ltd IPO Review (Avoid)

VSK Projects Ltd.: The Company is an EPC contractor and is now planning to procure construction equipments and key machinery for its business model as also setting up of engineering design studio and training centres at Chennai, Cochin, Delhi, Hyderabad and Ahmedabad. For meeting funding for this plans and other general corpus fund, it is offering (*) equity shares of Rs. 10 each within a price band of Rs. 55-60 to mobilize around Rs. 55 crore. The issue is opening on 29.06.12 and will close on 04.07.2012. Minimum application is to be made for 100 shares and in multiples thereof. Aryaman Financial Services Ltd. is the sole BRLM for this offer and Bigshare Services Pvt. Ltd. is the registrar to the issue. Shares will be listed on BSE and NSE post allotment. This IPO has been graded IPO Grade 1 by CRISIL indicating poor fundamentals of the company. As on 31.12.2011 the order book of the company stood at Rs. 98.25 crore.


Conclusion / Investment Strategy

On performance front, for last two fiscals the company reported Total turnover/ net profit of Rs 60.25 crore/3.16 crore (2010-11) and Rs. 30.24 crore/Rs. 2.00 crore (2009-10) respectively. For the nine months ended 31.12.2011 it has earned net profit of Rs. 5.63 crore on a turnover of Rs. 97.55 crore. In December 2010 it issued bonus shares in the ratio of 4 shares for every 1 share held. Last three fiscal's average EPS stands at Rs. 8.49 and for nine month period at Rs. 7.03 and NAV of Rs. 23.09 per share.  These EPS gets diluted on enhanced equity post this issue and thus issue looks fully priced. BRLM's track record is poor. Lower IPO grading also makes it a risky bet, hence avoid.

Review By Dilip Davda on Jun 27, 2012

The VKS Projects 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 VKS Projects IPO worth investing. The VKS Projects IPO Note sets the IPO expectations in systematic way which tells you if VKS Projects IPO good to buy (good or bad / yes or no). The IPO Forecast tells you weather to invest in VKS Projects IPO by providing IPO recommendations i.e. subscribe, avoid and neutral.

Review Author

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, a freelance journalist

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.

Email: dilip_davda@rediffmail.com


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