Chittorgarh.com Logo
Loading...

Containe Tech BSE SME IPO review (Avoid)

Review By Dilip Davda on Sep 19, 2022

•    CTL is in the business of auto safety and GPS solution devices. 
•    Its performance so far has been minuscule and listless. 
•    Based on its FY22 earnings, the issue is exorbitantly priced. 
•    There is no harm in skipping this pricy issue. 

ABOUT COMPANY:
Containe Technologies Ltd. (CTL) is engaged in the business of Automobile Safety and GPS solutions in the Automobile Sector. It manufactures a wide range of technology-intensive electronic and mechanical automotive products. These have applications across vehicle segments, including four-wheeler passenger vehicles, light commercial vehicles, and heavy commercial vehicles.

The Company is manufacturing an electronic Speed Limiting Device (SLD), "MOTOREYE & LIMITS" Brand Electronic Fuel Regulator & Pedal Interface, suitable for the latest Vehicle of BS-IV Standards to the Oldest Vehicles. The Speed Limiting Devices are Tested and Approved by the Automotive Research Association of India (ARAI), Pune. It is suitable for all types of commercial transport categories of vehicles and educational institutions Buses. CTL is also manufacturing Vehicle Location Tracking Devices (VLTD), the "TRANOPRO" Brand, suitable for all types of vehicles. The Vehicle Location Tracking Devices are Tested and Approved by International Centre for Automotive Technology (ICAT). As of the date of filing this offer document, it had 18 employees on its payroll. 

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its need for working capital (Rs. 2.07 cr.), general corporate purposes (Rs. 0.23 cr.), CTL is coming out with a maiden IPO of 1744000 equity shares of Rs. 10 each at a fixed price of Rs. 15 per share to mobilize Rs. 2.62 cr. The issue opens for subscription on September 20, 2022, and will close on September 22, 2022. The minimum application is to be made for 8000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 27.93% of the post-IPO paid-up equity capital of the company. CTL is spending Rs. 0.32 cr. for this IPO. In the offer document, there has been a mismatch in issue expenses and general corporate expenses tally in the details of the object of the issue. (Refer to page no. 57 and 59). 

The issue is solely lead managed by Finshore Management Services Ltd., and Cameo Corporate Services Ltd. is the registrar to the issue. Nikunj Stock Brokers Ltd. is the market maker for the company. 

Having issued initial equity shares at par, the company issued/converted further equity shares in the price range of Rs. 11 to Rs. 30 per share between December 2021 and May 2022. The average cost of acquisition of shares by the promoters is Rs. 11.50 and Rs. 12.38 per share. 

Post this IPO, CTL's paid-up equity capital of Rs. 4.50 cr. will stand enhanced to Rs. 6.24 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 9.37 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, CTL has reported a turnover/net profit of Rs. 2.92 cr. / Rs. 0.05 cr. (FY20), Rs. 0.60 cr. / Rs. 0.01 cr. (FY21), and Rs. 2.07 cr. / Rs. 0.04 cr. (FY22). Thus it has posted inconsistency in its top and bottom lines for the reported periods. 

For the last three fiscals, CTL has posted an average EPS of Rs. 0.27 and an average RoNW of 1.46%. The issue is priced at a P/BV of 1.35 based on its NAV of Rs. 11.15 as of March 31, 2022, and at a P/BV of 1.16 based on its post-IPO NAV of Rs. 12.98 per share. 

If we attribute FY22 earnings on post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 214. Thus the issue is exorbitantly priced. 

COMPARISON WITH LISTED PEERS:
As per the offer documents, CTL has no listed peers to compare with. 

DIVIDEND POLICY:
The company has not declared/paid any dividend for the reported periods of the offer document. It will adopt a prudent dividend policy post IPO, based on its financial performance and future prospects. 

MERCHANT BANKER'S TRACK RECORD:
This is the 29th mandate from Finshore Management in the last five fiscals (including the ongoing one). Out of the last 10 listings, 2 opened at discount, 2 at par, and the rest with premiums ranging from 0.9% to 150% on the day of listing.


Conclusion / Investment Strategy

CTL has not performed to match its asking price. There has been garble in IPO-related expenses and general corporate expenses data in offer documents. Based on FY22 earnings, the issue is exorbitantly priced. There is no harm in ignoring this pricy issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 19, 2022

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

Containe Technologies IPO FAQs

  1. 1. Why Containe Technologies IPO?

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

  2. 2. How is Containe Technologies IPO?

    Read the Containe Technologies IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Containe Technologies IPO what should investors do?

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

  4. 4. Is Containe Technologies IPO good?

    Our recommendation for Containe Technologies IPO is to avoid.

  5. 5. Is Containe Technologies IPO worth Investing?

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

  6. 6. When will Containe Technologies IPO allotment status?

    The Containe Technologies IPO allotment status will be available on or around Sep 27, 2022. The allotted shares will be credited in demat account by Sep 29, 2022. Visit Containe Technologies IPO allotment status to check.

  7. 7. When will Containe Technologies IPO list?

    The Containe Technologies IPO list date is not yet available. The Containe Technologies IPO is planned to list on Sep 30, 2022, at BSE SME.

Comments

Add a public comment...