Review By Dilip Davda on Sep 25, 2018
• BBTCL is in the corrugated box and sheet manufacturing business.
• This segment is highly competitive with many players.
• Financial data in offer documents has some mismatch.
• FY18 top and bottom line spurt raises eyebrows.
• Issue is fully priced on given parameters.
B&B Triplewall Containers Ltd. (BBTCL) is engaged in manufacturing of corrugated boxes and corrugated sheets. The company is headquartered at Bangalore and manufacturing facilities situated at Bangalore and Tamilnadu. The manufacturing facility is divided into 2 units; both the units are engaged in manufacturing of corrugated sheets and boxes. It mainly caters to packaging industry and has been able to develop a loyal clientele network consisting of various packaging companies and MNC’s. Currently it is operating in domestic markets with r products being supplied on PAN India basis, but majority revenue is from the state of Karnataka.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans for repayment of loans (Rs. 8.30 cr.), working capital and general corpus fund needs, BBTCL is coming out with a maiden IPO of 5553000 equity shares of Rs. 10 each at a fixed price of Rs. 36 per share to mobilize Rs. 19.99 cr. Issue opens for subscription on 28.09.18 and will close on 05.10.18. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 27.07% of the post issue paid up capital of the company. Issue is solely lead managed by Gretex Corporate Services Pvt. Ltd. while Purva Sharegistry (India) Pvt. Ltd. is the registrar to the issue.
Having raised initial equity at par, it raised further equity in the price range of Rs. 40 to Rs. 190 per share (on the basis of Rs. 10 FV) between March 2012 and May 2016. It has also issued bonus shares in the ratio of 3 for 1 in May 2018. Average cost of acquisition of shares by the promotes is Rs. 1.44, Rs. 1.63, Rs. 2.63, Rs. 2.90, Rs. 6.07, Rs. 6.75 and Rs. 47.50 per share. Post issue, BBTCL’s current paid up equity capital of Rs. 14.96 cr. will stand enhanced to Rs. 20.51 cr.
On performance front, for last four fiscals, BBTCL has posted turnover/net profits of Rs. 45.04 cr. / Rs. 1.28 cr. (FY15), Rs. 101.76 cr. / Rs. 1.93 cr. (FY16), Rs. 101.95 cr. / Rs. 1.67 cr. (FY17) and Rs. 166.97 cr. / Rs. 4.57 cr. (FY18). Sudden jump in top and bottom lines for FY18 raises eyebrows. According to information, this is result of hike in capacities and its utilization. For last three fiscals, BBTCL has posted an average EPS of Rs. 38.29 and an average RoNW of 15.31%. Issue is priced at a P/BV of 0.59 based on its NAV of Rs. 61.13 as on 31.03.18. (??? – There appears to be some mismatch on NAV calculations. Ref. offer document page nos. 93 and 94) If we consider FY18 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 16 plus. Thus issue is aggressively priced.
As per offer documents, it has shown Worth Peripherals as its listed peers (though not strictly comparable) that is currently trading at a P/E of around 15 (as on 25.09.18).
MERCHANT BANKER’S TRACK RECORD:
On merchant banker’s front, this is 16th mandate from its stable in last three years. Out of last 10 listings, 1 opened at discount, 3 at par and the rest with a premium ranging from 1.32% to 8% on the day of listing.
There appears to be some mismatch in offer documents on Pre-Post bonus EPS and NAV. Issue is aggressively priced. Considering missing clarity on financial data, one may give it a miss.
Review By Dilip Davda on Sep 25, 2018
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. 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. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. 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 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.
The B&B Triplewall 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 B&B Triplewall IPO worth investing. The B&B Triplewall IPO Note sets the IPO expectations in systematic way which tells you if B&B Triplewall IPO good to buy (good or bad / yes or no). The IPO Forecast tells you weather to invest in B&B Triplewall IPO by providing IPO recommendations i.e. subscribe, avoid and neutral.
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