Emkay Taps & Cutting Tools Ltd IPO Review (Apply)

Review By Dilip Davda on Jul 24, 2015

Emkay Taps & Cutting Tools Ltd (ETCT) is engaged in making threads tools (HSS Taps) and selling under "Emkay" brand.  The varieties of taps offered by it include HIPerformance Thread Forming Taps, HI-Performance Spiral Fluted Taps, HI-Performance Spiral Pointed Taps, HIPerformance Taps for Cast Iron Tapping, HI-Performance Special Taps, PM Taps, Carbide Taps, Special Designed Roll Taps, Through Coolant Taps (T.C.H), Special Geometry ?Spiral Fluted? Taps, Special Geometry ?Spiral Pointed? Taps, Taps With Special Coatings among others are widely used in several critical auto components, ensuring the right product for each customer specific production requirement and timely deliveries has given ETCT a competitive advantage in this high-precision industry.

To avail listing benefits and providing liquidity to stakeholders, the company is coming out with a maiden IPO under "Offer for Sale" with 471200 equity share of Rs. 10 each at a fixed price of Rs. 330 per share to mobilize Rs. 15.55 crore. Issue opens for subscription on 27.07.15 and will close on 30.07.15. Minimum application is to be made for 400 shares and in multiples thereon, thereafter. Issue is lead managed by Hem Securities Ltd. and Bigshare Services Pvt Ltd is the registrar to the issue.  This being offer for sale, its equity remains at Rs.1.78 crore post issue. Shares will be listed on BSE SME after allotments.

On performance front, for last three fiscals, the company has posted and average EPS of Rs. 30.61 with turnover/net profits of Rs. 35.65 crore/Rs. 8.35 crore (FY 2012), Rs. 31.52 crore/Rs. 4.92 crore (FY 2013) and Rs. 30.01 crore/Rs. 5.74 crore on an equity base of Rs. 0.85 crore. Post incorporation till 1996 it issued equity shares at par, in 1998 it issued the same at Rs. 24 per share, in 2008 it issued fresh equity at a price of Rs. 150, in 2014 it bought back equity at a price of Rs. 192 per share and in March 2015 it issued bonus shares in the ratio of 1.5 shares for every 1 share held that took its paid up equity capital to Rs. 1.78 crore. For 10months ended 31.01.15, It has posted net profit of Rs. 8.64 crore on a turnover of Rs. 32.54 crore. If we annualize these earnings and attribute it on fully diluted current equity, then the EPS stands at Rs. 58.26 translating in to asking price at a P/E of 6. As per prospectus, on equity of Rs. 0.85 crore, its asking price is at a P/E of 10+ and at a P/BV of 1. Thus the issue appears justifiably priced. However, its inconsistent performance for last three fiscals raises concern. 

On merchant banker's front, this is 14th IPO from its stable and past listed mandates have given average returns in 11 out of 13.


Conclusion / Investment Strategy

Emkay Taps is a long term bet. The EPS stands at Rs. 58.26 translating in to asking price at a P/E of 6. Its asking price is at a P/E of 10+. Thus the issue appears justifiably priced.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Jul 24, 2015

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

Emkay Taps IPO FAQs

  1. 1. Why Emkay Taps IPO?

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

  2. 2. How is Emkay Taps IPO?

    Read the Emkay Taps IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Emkay Taps IPO what should investors do?

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

  4. 4. Is Emkay Taps IPO good?

    Our recommendation for Emkay Taps IPO is to subscribe.

  5. 5. Is Emkay Taps IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Emkay Taps IPO.

  6. 6. When will Emkay Taps IPO allotment status?

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

  7. 7. When will Emkay Taps IPO list?

    The Emkay Taps IPO will list on Monday, August 31, 2015, at BSE SME.








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