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Latteys Ind NSE SME IPO review (Avoid)

Review By Dilip Davda on May 18, 2018

Latteys Industries Ltd. (LIL) is in the business of manufacturing of pumping solutions for homes, agriculture and industrial sectors.  Pumps include submersible, self priming, centrifugal, shallow and horizontal pumps. Its product portfolio has more than 700 models of pumps and is catering domestic demands.

To part finance its working capital and general corpus fund needs,  LIL is coming out with a maiden IPO of 1222000 equity shares of Rs. 10 each at a fixed price of Rs.66 per share to mobilize Rs. 8.07 crore. Issue opens for subscription on 23.05.18 and will close on 28.05.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.57% of the post issue paid up capital of the company. Having issued initial equity at par, it raised further equity in the price range of Rs. 12.53 to Rs. 50 per share and has also issued bonus shares in the ratio of 1 for 1 in January 2019. Average cost of acquisition of shares by the promoters is Rs. 6.23 and Rs. 6.29 per share.Post issue, its current paid up equity capital of Rs. 3.38 cr. will stand enhanced to Rs. 4.60 cr.

On  performance front, for last four fiscals LIL has posted turnover/net profits of Rs. 18.56 cr. / Rs. 0.14 cr. (FY14), Rs. 21.53 cr. / Rs. 0.14 cr. (FY15), Rs. 26.05 cr. / Rs. 0.31 cr. (FY16) and Rs. 35.77 cr. / Rs. 0.56 cr. (FY17). For first nine months of FY18 it has earned net profits of Rs. 0.43 cr. on a turnover of Rs. 22.89 cr. For last three fiscals it has posted an average EPS of Rs. 1.30 and an average RoNW of 15.01%. Issue is priced at a P/BV of 6.03 on the basis of NAV of Rs. 10.95 as on 31.12.17 and at a P/BV of 2.50 on the basis of post issue NAV of Rs. 26.44 per share. If we annualize latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 53 plus making it aggressively priced issue. As per offer documents it is showing Roto Pumps, Shakti Pumps and Korloskar Bros as its listed peers that are currently trading at a P/Es of 32, 43 and 45 respectively (as on 18.05.18). As on 31.12.17 its debt ratio is 3.41.

On merchant banker’s front, this is 61st mandate from its stable in last three fiscals. Out of last 10 listings all opened with a premium on offer price ranging from 1.59% to 40% on the day of listing.


Conclusion / Investment Strategy

Latteys Industries SME IPO is an aggressively priced issue. There is no harm in giving this a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on May 18, 2018

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

Latteys Industries IPO FAQs

  1. 1. Why Latteys Industries IPO?

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

  2. 2. How is Latteys Industries IPO?

    Read the Latteys Industries IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Latteys Industries IPO what should investors do?

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

  4. 4. Is Latteys Industries IPO good?

    Our recommendation for Latteys Industries IPO is to avoid.

  5. 5. Is Latteys Industries IPO worth Investing?

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

  6. 6. When will Latteys Industries IPO allotment status?

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

  7. 7. When will Latteys Industries IPO list?

    The Latteys Industries IPO will list on Tuesday, June 5, 2018, at NSE SME.