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Junction Fabrics BSE SME IPO review (May apply)

Review By Dilip Davda on Jun 14, 2015

Junction Fabrics And Apparels Ltd (JFAL) is engaged in the business of garment manufacturing and selling both Knitted Fabric as well as Garments. Its range of garment products covers all the age group segments such as kids wear, mens wear, ladies wear, boys & girls wear. JFAL uses variety of knitted fabrics such as 100% cotton, 100% polyester, blended (cotton and polyester) and printed polyester fabrics in the production of garments and selling it to domestic garment manufacturers.

JFAL sales around 80% of its products in domestic markets and the rest to Middle East Countries such UAE, Kuwait, Qatar, Bahrain, Saudi where there is demand for company’s products as there are sizeable expatriates living in these countries.

JFAL manufactures 100% cotton fabrics by supplying Yarn to the Mills for Knitting, Dyeing, Printing, Compacting factories. To meet its working capital requirement the company is coming out with an IPO of 1000000 equity shares of Rs. 10 each at a fixed price of Rs. 16 per share to mobilize Rs. 1.60 crore. Issue opens for subscription on 25.06.15 and will close on 29.06.15. Minimum application is to be made for 8000 shares and in multiples thereon, thereafter. Post issue its paid up capital will rise from Rs. 1.69 crore to Rs. 2.69 crore. Issue is lead managed by Hem Securities Ltd and Bigshare Services Pvt Ltd is the registrar to the issue.

On performance front, the company has reported turnover and net profit of Rs. 9.77 crore /Rs. 0.14 crore ( 2012-13) and Rs. 14.55 crore/Rs. 0.12 crore (2013-14). For first nine months ended 31.12.2014 it has earned net profit of Rs. 0.11 crore on a turnover of Rs. 9.46 crore.  Thus it has posted an average EPS of Rs.1.5 for previous two fiscals on an equity capital of Rs. 0.85 crore. It issues preferential equity to promoters at a price of Rs. 12.10 to raise it to Rs. 1.69 crore which will get enhanced to Rs. 2.69 crore post this IPO. If we annualize the latest working and attribute that to enhanced equity then the EPS stands at Rs.0.56 and thus the asking price is at a P/E of 28 plus.

This is 14th IPO from the Lead Manager that has shown average performance for its past mandates.


Conclusion / Investment Strategy

Based on above details, this IPO looks pricy and post listing may witness thin trading after initial hiccups.

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 prior to making any actual investment decisions, based on information published here. As SME issues have entry barriers and low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Author has no plans to invest in this offer.

Review By Dilip Davda on Jun 14, 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

Junction Fabrics IPO FAQs

  1. 1. Why Junction Fabrics IPO?

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

  2. 2. How is Junction Fabrics IPO?

    Read the Junction Fabrics IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Junction Fabrics IPO what should investors do?

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

  4. 4. Is Junction Fabrics IPO good?

    Our recommendation for Junction Fabrics IPO is to subscribe for long term.

  5. 5. Is Junction Fabrics IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Junction Fabrics IPO.

  6. 6. When will Junction Fabrics IPO allotment status?

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

  7. 7. When will Junction Fabrics IPO list?

    The Junction Fabrics IPO will list on Friday, July 10, 2015, at BSE SME.