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Darshan Orna BSE SME IPO review (Avoid)

Review By Dilip Davda on Apr 28, 2016

Darshan Orna Ltd (DOL) is a Small and Medium Enterprise (SME) engaged in the Gold & Silver Jewellery and Ornaments Business. The Company started its commercial operations as a Wholesaler and Trader of Gold and Silver Jewelries and Ornaments by setting a unit in Manek Chowk area of Ahmedabad in North Gujarat, which is known as a hub of Gold & Silver Market. Company’s portfolio comprises Traditional Jewellery, Indo-Western Jewellery & Modern Jewellery. DOL’s Jewelries and Ornaments are designed keeping in mind the demand of various customers coming from diverse cultures and age groups. Over the last couple of years, the company has achieved tremendous growth in sales. The company sources its raw material from its suppliers. Over the years, the company has built up a credible sales-force to market its jewelries in Ahmedabad. The company achieved sales of Rs. 8 Crores in Financial Year 2014-2015, and has projected a sales turnover of approximately Rs. 25 Crores for the Financial Year 2015-2016.

To part finance its working capital requirements and general corpus funds, the company is issuing 1256000 equity share of Rs. 10 each at a fixed price of Rs. 60 per share to mobilize Rs. 7.54 crore. Issue opens for subscription on 02.05.16 and will close on 11.05.16. (Eyebrow raised by market men for such a long duration). Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Issue is solely managed by First Overseas Capital Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE SME. Having issued initial equity at par, it issued further shares at a price ranging from Rs. 60 to Rs. 100 during the years 2012to 2015. It has also issued bonus shares in the ratio of 11 shares for every 2 shares held. Its current paid up equity capital of Rs. 3.51 crore will stand enhanced to Rs. 4.76 crore post IPO.

On performance front, the company has reported turnover/net profits of Rs. 0.80 cr. / Rs. 0.002 cr. (FY13), Rs. 1.20 cr. / Rs. 0.002 cr. (FY14), Rs. 8.23 cr. / Rs. 0.02 cr. (FY15). For first nine months ended 31.12.15 it has earned net profit of Rs. 0.22 crore on a turnover of Rs. 12.04 crore.  If we annualize these earnings and attribute to the fully diluted equity post IPO then asking price is at a P/E of 98 plus which is much higher compared to average industry average P/E of 35 plus and thus makes it aggressively priced issue.

Merchant banker has poor track records for past mandates.


Conclusion / Investment Strategy

Since issue is aggressively priced, there is no harm giving it a miss. However, only risk savvy investors with surplus funds may park their funds for long term rewards.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Apr 28, 2016

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

Darshan Orna IPO FAQs

  1. 1. Why Darshan Orna IPO?

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

  2. 2. How is Darshan Orna IPO?

    Read the Darshan Orna IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Darshan Orna IPO what should investors do?

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

  4. 4. Is Darshan Orna IPO good?

    Our recommendation for Darshan Orna IPO is to avoid.

  5. 5. Is Darshan Orna IPO worth Investing?

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

  6. 6. When will Darshan Orna IPO allotment status?

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

  7. 7. When will Darshan Orna IPO list?

    The Darshan Orna IPO will list on Thursday, May 19, 2016, at BSE SME.