Jigar Cables SME IPO review (Avoid)

Review By Dilip Davda on Jul 14, 2017

Jigar Cables Ltd. (JCL) is an ISO-9001:2015 certified company having its facility at Gondal, Dist Rajkot in Gujarat, manufacturing electric wires and cables as per national & international standards and customer's specifications. It sells its products under "SIGMA" brand since last two decades. It has the vision of being most preferred supplier of best quality electrical products having "Value for Money". JCL has recently incorporated a new Company under the name of Jigar Polymers Limited, for manufacturing of PVC and XLPE as backward integration. This group came with Ultracab (India) Ltd which is considered its peer.

To meet its prepayment/repayment of debts and working capital needs, the company is coming out with a maiden IPO of 1864000 equity shares of Rs. 10 each at a fixed price of Rs. 30 per share to mobilize Rs. 5.59 crore. Issue opens for subscription on 18.07.17 and will close on 20.07.17. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Pantomath Capital Advisors Pvt Ltd and Bigshare Services Pvt Ltd is the registrar to the issue. The issue will constitute 26.51% of the fully diluted post issue paid up capital of the company. After issuing initial equity at par on incorporation, it raised further equity at a price of Rs. 30 per share. Post issue, its current paid up equity capital of Rs. 5.17 crore will stand enhanced to Rs. 7.03 crore.

On performance front, the company (as partnership firm) marked declining trends in top and bottom lines from FY13 to FY 15 with turnover/net profits of Rs. 15.09 cr. / Rs. 0.03 cr. (FY13), Rs. 10.14 cr. / Rs. 0.02 cr. (FY14) and Rs. 8.05 cr. / Rs. 0.002 cr. (FY15). It posted turnover and net profits of Rs. 9.36 cr. / Rs. 0.003 cr. (FY16) and Rs. 13.36 cr. / Rs. 0.05 cr. (for period ended 6th February 2017 as partnership firm) and from 07.02.17 to 31.03.17 it posted turnover of Rs. 1.27 crore with a net profit of Rs. 0.002 cr. However, as per prospectus details, last three year's average EPS stands at Rs. 0.11 with average RoNW of 0.92%. If we take latest earnings (on combined basis) and attribute it on fully diluted equity post issue, then asking price is at a P/E of 428 and at a P/BV of 2.54 which makes this issue exorbitantly priced. Group Company Ultracab is currently trading around 450 P/E, whereas Cord Cables is trading around 23 P/E. However, as per company, peers are not strictly comparable with it.

On merchant banker's front, (as per details given on page 330-332 of prospectus) in last three fiscals -including the current one, it has brought 38 issues. Last 10 listing 9 have given positive returns on the day of listing where as 1 issue opened at par value.

Conclusion: Considering aggressive pricing of the issue, there is no harm in giving it a miss.


Conclusion / Investment Strategy

Considering aggressive pricing of Jigar Cables SME IPO, there is no harm in giving it a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jul 14, 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

Jigar Cables IPO FAQs

  1. 1. Why Jigar Cables IPO?

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

  2. 2. How is Jigar Cables IPO?

    Read the Jigar Cables IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Jigar Cables IPO what should investors do?

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

  4. 4. Is Jigar Cables IPO good?

    Our recommendation for Jigar Cables IPO is to avoid.

  5. 5. Is Jigar Cables IPO worth Investing?

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

  6. 6. When will Jigar Cables IPO allotment status?

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

  7. 7. When will Jigar Cables IPO list?

    The Jigar Cables IPO will list on Friday, July 28, 2017, at BSE SME.

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