GG Engineering BSE SME IPO review (Avoid)

Review By Dilip Davda on Jun 23, 2017

GG Engineering Ltd (GGEL) is an authorized O.E.A. of Ashok Leylend & Perkins make engine. It manufactures DG Sets in the range of 10 to 2250 KVA with Ashok Leylend Engine ranging from 10 to 250 KVA and with Perkins Engine ranging from 300 to 2250 KVA. The company is equipped with all facilities to execute all types of manufacturing activities such as punching, forming, shearing, bending, fabrication, welding & assembly etc.

To part finance its working capital and general corpus fund needs, the company is coming out with a maiden IPO of 1116000 equity share of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 2.23 crore. Issue opens for subscription on 30.06.17 and will close on 07.07.17. Minimum application is to be made for 6000 shares and in multiples, thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is lead managed by Navigant Corporate Advisors Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue. Its entire equity is issued at par so far. Post issue its current paid up equity capital of Rs. 3.07 crore will stand enhanced to Rs. 4.19 crore.

On performance front, the company has posted turnover/net profit-(loss) of Rs. 2.13 cr. / Rs. (-0.01) cr. (FY14), Rs. 2.07 cr./ Rs. 0.01 cr. (FY15) and Rs. 5.20 cr. / Rs. 0.14 cr. (FY16). For the first nine months of the current fiscal ended on 31.12.16 it has earned net profit of Rs. 0.02 crore on a turnover of Rs. 5.99 crore. Thus it has inconsistency in top and bottom lines. If we annualize latest earnings and attribute it on fully diluted equity post IPO, then asking price is at a P/E of 285 plus against industry average P/E of 36 plus. Its average RoNW for last three fiscals is very poor at just 2.20%. Offer price is at a P/BV of 1.90. Peers are trading in the range of 13 to 18 P/Es. GGEL operates in highly competitive field and has insufficient market reach. Its dependence on few suppliers may cause concern.

On merchant banker’s front, this is the 5th mandate from its stable and past four issues have mixed track record. Surprisingly, prospectus does not contain the track record of merchant banker. Even web site of merchant banker is not having updated track record of its past mandates.

Conclusion: Investors may give a miss to this highly priced issue.


Conclusion / Investment Strategy

Investors may give a miss to this highly priced issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jun 23, 2017

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

GG Engineering IPO FAQs

  1. 1. Why GG Engineering IPO?

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

  2. 2. How is GG Engineering IPO?

    Read the GG Engineering IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. GG Engineering IPO what should investors do?

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

  4. 4. Is GG Engineering IPO good?

    Our recommendation for GG Engineering IPO is to avoid.

  5. 5. Is GG Engineering IPO worth Investing?

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

  6. 6. When will GG Engineering IPO allotment status?

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

  7. 7. When will GG Engineering IPO list?

    The GG Engineering IPO will list on Monday, July 17, 2017, at BSE SME.








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