Karnimata Cold Storage Ltd IPO Review (Avoid)

Review By Dilip Davda on Feb 21, 2014

 

Karnimata Cold Storage Ltd. (KCSL): The company is engaged in the business of cold storage and trading of agricultural commodities currently specializing in potatoes. It has set up and made operational its first cold storage unit in Medinipur District, West Bengal having an installed capacity of 1,81,000 quintals for preservation of potatoes. The local farmer or traders of potatoes hire these services to store their produces prior to sell. 

 

To meet working capital finance for providing seasonal loans to the hirers, KCSL is issuing 1518000 equity share of Rs. 10 each at a fixed price of Rs. 20 per share (i.e. at a premium of Rs. 10 per share) to mobilize Rs. 3.04 crore. Issue opens for subscription on 25.02.14 and will close on 03.03.14. Minimum application is to be made for 6000 shares and in multiples thereof, thereafter. Post this issue, its existing equity of Rs. 3.57 crore will enhance to Rs. 5.08 crore. Shares will be listed on BSE SME post allotments. Issue is lead managed by Aryaman Financial Services Ltd.and Bigshare Services Pvt. Ltd is the registrar to the issue. 

 

As the company’s facility became operational in March 2012, it has just completed first full year of operation FY 2012-13 for which is earned net profit of Rs. 0.03 crore on a turnover of Rs. 3.77 crore. For first six months of current fiscal ended 30.09.13 it has earned net profit of Rs. 0.05 crore on a turnover of Rs. 2.03 crore giving an annualized EPS of Rs. 0.28. If we attribute these earnings on enhanced equity the EPS stands at Rs. 0.20 translating into asking price at a P/E of 100 and at a P/BV of 2 as its NAV as on 30.09.13 is at Rs.10.38.

 

Lead manager has poor track record with its 13 mandates of IPOs so far.


Conclusion / Investment Strategy

 

Avoid this costly offer with entry barriers.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Feb 21, 2014

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

Karnimata Cold Storage IPO FAQs

  1. 1. Why Karnimata Cold Storage IPO?

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

  2. 2. How is Karnimata Cold Storage IPO?

    Read the Karnimata Cold Storage IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Karnimata Cold Storage IPO what should investors do?

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

  4. 4. Is Karnimata Cold Storage IPO good?

    Our recommendation for Karnimata Cold Storage IPO is to avoid.

  5. 5. Is Karnimata Cold Storage IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Karnimata Cold Storage IPO.

  6. 6. When will Karnimata Cold Storage IPO allotment status?

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

  7. 7. When will Karnimata Cold Storage IPO list?

    The Karnimata Cold Storage IPO will list on Tuesday, March 18, 2014, at BSE SME.








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