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Lakhotia Polyesters (India) Ltd IPO Review (Avoid)

Review By Dilip Davda on Mar 18, 2013

In a surprise announcement, we have yet one more BSE SME IPO from Lakhotia Polyester (India) Ltd. (LPIL) Details of the same are as under:

LPIL is the Flagship Company of the group is a new age fashion yarn manufacturer. The Company has grown under the dynamic leadership of Mr. Madhusudan Lakhotia. The promoters of the Company are associated with the textile industry since decades. The Company was formed in 2005 with the objective of producing textile yarn for catering to the domestic and international markets. The Company started with manmade yarn products and found its niche in the metallic yarn and related products. The Company is engaged in the business of manufacturing of lacquer coated Polyester films, transfer foils and M type metallic yarns, which are appropriate for textile, printing, decoration and packing industry and manufacturing of grey fabrics used in sarees and as interline cloth. The yarns produced by the Company are used for made ups in apparels, hosiery, home furnishings & garment industry. The metallic yarn and metallic film manufacturing facility is located at Pimpalgaon Baswant, Nashik, whereas fabric manufacturing facility is located at Malegoan, Nashik. The manufacturing facilities are fully backed by a strong team of technicians, machine operators and production controllers.

To augment long term working capital and general corpus fund, the company is coming out with an IPO of 1452000 equity share of Rs. 10 each at a fixed price of Rs. 35 per share to mobilize Rs. 5.08 crore. Issue opens for subscription on 19.03.13 and closes on 21.03.13.Minimum application is to be made for 4000 shares and in multiples thereof, thereafter.  Post issue, shares will be listed on BSE SME.  This issue is lead managed by Intensive Fiscal Services Pvt. Ltd. and registrar to the issue is Sharex Dynamic (India) Pvt. Ltd.

On the company's performance front, it has posted an average EPS of Rs. 1.05 for last three fiscals and Rs. 0.81 for first half of current fiscal. Company's NAV is at Rs. 12.15 as at 31.03.12 and Rs. 24.99 as at 30.09.12 which will stand enhanced to Rs. 28.87 post issue. Thus the asking price is at a P/E of 35 plus on existing equity that also covers bonus issue in the ratio of 10 for 26 in the year 2011. In August 2012, the company made preferential issue of 1241400 equity share at a price of Rs. 35 per share that raised the NAV as on 30.09.12. Company's turnover of Rs. 10.74 crore for 2010-11 fell to Rs. 7.96 for 2011-12 and for H1 of current fiscal it is Rs. 3.35 crore.


Conclusion / Investment Strategy

On merchant banker's mandate performance part, this is the fifth issue and out of earlier four mandates only 1 has failed to give gains on debut. But considering diminishing top line, higher valuation and the entry barrier, one should avoid this issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Mar 18, 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

Lakhotia Polyesters IPO FAQs

  1. 1. Why Lakhotia Polyesters IPO?

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

  2. 2. How is Lakhotia Polyesters IPO?

    Read the Lakhotia Polyesters IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Lakhotia Polyesters IPO what should investors do?

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

  4. 4. Is Lakhotia Polyesters IPO good?

    Our recommendation for Lakhotia Polyesters IPO is to avoid.

  5. 5. Is Lakhotia Polyesters IPO worth Investing?

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

  6. 6. When will Lakhotia Polyesters IPO allotment status?

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

  7. 7. When will Lakhotia Polyesters IPO list?

    The Lakhotia Polyesters IPO will list on Wednesday, April 3, 2013, at BSE SME.