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Gretex Industries NSE SME IPO review (Avoid)

Review By Dilip Davda on Sep 28, 2016

Gretex Industries Ltd (GIL) has started its business by manufacturing of fabric and hosiery garments like thermal innerwear and leggings in the year 2013-14. It also started taking job work assignments for knitting for Rupa & Company Limited and gradually for others. Further GIL also started production under
its brand “Lekme” besides undertaking job work assignments. The company manufactures thermal innerwear and leggings under own brand name of “Lekme”. Its product range includes production of fabric by using Interlock, Rib, Reversible, Fleece, Polyfill techniques. It also manufactures Sinker using Lycra yarns. Company’s manufacturing facility is situated at Jalan Industrial Complex in Domjur Area in the district of Howrah, which is one of the oldest Industrial Complex nearby Kolkata.

To part finance working capital and general corpus funds requirements, the company is coming out with a maiden IPO of 2028000 equity share of Rs. 10 each via book building route with a price band of Rs. 19-21 to mobilize around Rs. 3.85 to Rs. 4.26 crore (based on lower and upper price bands). Issue comprises of offer for sale (924000 shares) as well as fresh equity issue (1104000). Issue opens for subscription on 30.09.16 and will close on 05.10.16. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Issue is jointly lead managed by Pantomath Capital Advisors Pvt Ltd and Indian Overseas Bank. Bigshare Services Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on NSE SME Emerge platform. After issuing incorporation equity at par, it raised further equity at a price of Rs. 100 to Rs. 1000 during 2010-2013. It also issued bonus shares in the ratio of 33 for 1 in June 2015 and then further equity at a price of Rs. 11 per share in July 2015. Post issue its current paid up equity capital of Rs.3.16 crore will stand enhanced to Rs. 4.26 crore.

On performance front, for last four fiscals it has posted turnover / net profit of Rs.0.12 cr./ Rs. 0.003 cr. (FY13), Rs. 0.22 cr. / Rs. 0.03 cr. (FY14), Rs. 4.04 cr. / Rs. 0.28 cr. (FY15) and Rs. 3.76 cr. / Rs. 0.31 cr. (FY16). If we attribute latest earnings on fully diluted equity post IPO then asking price is at a P/E of 26+ to 28+ (based on lower and upper price bands). As per RHP the company has no listed peers to compare with. Based on performance and earnings, issue price appears to be on higher side.

On merchant banker’s front, this is the 26th mandate from Pantomath whereas 2nd from IOB. Pantomath has shown mixed trends for its past mandates on listings.

Conclusion: Only risk savvy cash surplus investors may consider investment for long term.


Conclusion / Investment Strategy

Only risk savvy cash surplus investors may consider investment for long term.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 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

Gretex Industries IPO FAQs

  1. 1. Why Gretex Industries IPO?

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

  2. 2. How is Gretex Industries IPO?

    Read the Gretex Industries IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Gretex Industries IPO what should investors do?

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

  4. 4. Is Gretex Industries IPO good?

    Our recommendation for Gretex Industries IPO is to avoid.

  5. 5. Is Gretex Industries IPO worth Investing?

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

  6. 6. When will Gretex Industries IPO allotment status?

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

  7. 7. When will Gretex Industries IPO list?

    The Gretex Industries IPO will list on Friday, October 14, 2016, at NSE SME.