Kavita Fabrics Ltd IPO Review (Avoid)

Review By Dilip Davda on Feb 15, 2013

Surat (Gujarat) based Kavita Fabrics Ltd (KFL) is engaged in manufacturing synthetic fabrics from man-made yarns by using weaving technology. Currently, our Company owns 36 jacquard power looms to undertake the weaving of the synthetic fabrics from man-made yarns. It manufactures synthetic fabrics in the form of semi-finished sarees and dress materials. To meet its long term working capital requirement, KFL is coming out with an issue of 1275000 equity share of Rs. 10 each at a price of Rs. 40 per share. Issue opens for subscription on 20.02.13 and will close on 22.02.13. Minimum application is to be made for 3000 shares and in multiples thereof, thereafter. Post issue, shares will be listed on BSE-SME. Issue is lead managed by Intensive Fiscal Services Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue.

As far as company's performance is concerned, it has posted an average EPS of Rs. 0.79 for last three fiscals and for the first five months ended 31.08.12, it has posted EPS of Rs. 0.90 with a net profit of Rs. 0.10 crore on a turnover of Rs. 2.14 crore. Translating this earnings on post issue equity of Rs. 3.47 crore, the EPS stands at Rs. 0.70 that marks P/E of 57 plus for the asking price of Rs. 40 per share and thus it is an expensive offer.


Conclusion / Investment Strategy

As for lead manager's track record, it managed 3 IPOs out of which, 1 failed to give listing gains on debut day. However, considering the aggressive pricing of the IPO, better give it a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Feb 15, 2013

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

Kavita Fabrics IPO FAQs

  1. 1. Why Kavita Fabrics IPO?

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

  2. 2. How is Kavita Fabrics IPO?

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

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

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

  4. 4. Is Kavita Fabrics IPO good?

    Our recommendation for Kavita Fabrics IPO is to avoid.

  5. 5. Is Kavita Fabrics IPO worth Investing?

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

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

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

  7. 7. When will Kavita Fabrics IPO list?

    The Kavita Fabrics IPO will list on Tuesday, March 12, 2013, at BSE SME.
More Kavita Fabrics IPO Views / Analysis / Recommendations ...








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