Dhanuka Commercial Ltd IPO Review (Avoid)

Review By Dilip Davda on May 19, 2014

Dhanuka Commercial is a Non Deposit taking Non-systemically Important Non Banking Finance Company (NBFC-ND-NSI) engaged primarily in the business of advancing loans and investing/trading in securities. It has been running on a modest operating scale till 2012 – 2013. To augment its capital base and meet need of corpus funds for its activities, the company is coming out with a maiden IPO for 4440000 equity share of Rs. 10 each at par to mobilize Rs. 4.44 crore. Issue opens for subscription on 22.05.14 and will close on 28.05.14. Minimum application is to be made for 10000 shares and in multiples thereof, thereafter. Issue is lead managed by Aryaman Financial Services Ltd and MAS Services Ltd is the registrar to the issue. During March 2001 to March 2007 the company issued equity shares at a price between Rs. 30 and Rs. 100 per share and then in January 2014 issued bonus shares worth Rs. 10.52 crore utilizing share premium of Rs. 12.70 crore standing to its credit by then. Thus its equity of Rs. 1.78 crore as at 31.12.2013 enhanced to Rs. 12.30 crore. Post this issue it will further rise to Rs. 16.74 crore.

The company has posted a net profit of Rs. 0.31 crore for the nine months period ended December 31, 2013 and  Rs. 0.09 crore for the year ended March 31, 2013 on the revenue of Rs. 1.03 crore and Rs. 1.24 crore respectively. Thus if one attribute the latest earnings on its enhanced equity then the EPS stands at mere Rs. 0.01 and thus asking price at par is also at a P/E of 1000 and thus it is not worth on this parameter at least. It is operating in high risk/low yield segment and in highly competitive area.

The merchant banker has poor track record.


Conclusion / Investment Strategy

 Avoid this at par issue as it has entry barrier as well as high P/E.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on May 19, 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

Dhanuka Commercial IPO FAQs

  1. 1. Why Dhanuka Commercial IPO?

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

  2. 2. How is Dhanuka Commercial IPO?

    Read the Dhanuka Commercial IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Dhanuka Commercial IPO what should investors do?

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

  4. 4. Is Dhanuka Commercial IPO good?

    Our recommendation for Dhanuka Commercial IPO is to avoid.

  5. 5. Is Dhanuka Commercial IPO worth Investing?

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

  6. 6. When will Dhanuka Commercial IPO allotment status?

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

  7. 7. When will Dhanuka Commercial IPO list?

    The Dhanuka Commercial IPO will list on Wednesday, June 11, 2014, at BSE SME.

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