Carewell Industries Ltd IPO Review (Avoid)

Review By Dilip Davda on Jul 21, 2014

Carewell Industries Limited (CIL)-(formerly known as PL Chemicals Private Limited) is engaged in marketing of “Rooster” brand mosquito repellent coils and the brand name “ROOSTER” is owned by its wholly owned subsidiary, CKM Homecare Solutions Private Limited. It is also engaged in the marketing of incense sticks (agarbattis) in the brand name “Deo” and “Samraj”.

CIL gets products manufactured from third party manufacturers under its own brand and market it through the network of dealers and distributors. Currently, its products are sold in South India. To meet its working capital requirements and brand building exercise, the company is coming out with its maiden IPO of 3304000 equity share of Rs. 10 each at a fixed price of Rs. 15 per share to raise Rs. 4.96 crore.  The issue opens for subscription on 25.07.14 and will close on 30.07.14. Minimum application is to be made for 8000 shares and in multiples thereof, thereafter. Issue is lead managed by Inventure Merchant Banker Services Pvt Ltd. And Purva Sharegistry (India) Pvt Ltd. Post issue shares will be listed on BSE SME.

Till fiscal 2011-12, the company has been incurring losses and for the fiscal 2012-13, it posted an EPS of Rs. 0.01. Thanks to the preferential issue of equity shares to promoters at a price of Rs. 35 (219330 shares) on 10.03.12 and Rs. 15 (400000 sharees) on 11.03.14 that lifted the NAV to Rs. 12.12 as on 28.02.14. For 11 months period ended on the said date the company posted a turnover of Rs. 0.88 crore with a net profit of Rs. 0.05 crore. If we attribute this earning on expanded equity of Rs. 7.10 crore post this issue, the EPS comes to below Rs. 0.01 and based on this the asking price is at a P/E of 1500 plus.

Lead manager has poor track record for its earlier nine mandates of SME IPOs.


Conclusion / Investment Strategy

 

Remark: Avoid this costly bet that also has entry barriers.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jul 21, 2014

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 before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

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.

Email: dilip_davda@rediffmail.com

Carewell Industries IPO FAQs

  1. 1. Why Carewell Industries IPO?

    The initial public offer (IPO) of Carewell Industries Ltd offers an early investment opportunity in Carewell Industries Ltd. A stock market investor can buy Carewell Industries IPO shares by applying in IPO before Carewell Industries Ltd shares get listed at the stock exchanges. An investor could invest in Carewell Industries IPO for short term listing gain or a long term.

  2. 2. How is Carewell Industries IPO?

    Read the Carewell Industries IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Carewell Industries IPO what should investors do?

    Carewell Industries IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Carewell Industries IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Carewell Industries IPO good?

    Our recommendation for Carewell Industries IPO is to avoid.

  5. 5. Is Carewell Industries IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Carewell Industries IPO.

  6. 6. When will Carewell Industries IPO allotment status?

    The Carewell Industries IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Carewell Industries IPO allotment status to check.

  7. 7. When will Carewell Industries IPO list?

    The Carewell Industries IPO will list on Tuesday, August 12, 2014, at BSE SME.

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