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Review By Dilip Davda on March 15, 2017
Laxmi Cotspin Ltd (LCL) is engaged in the business of cotton processing in textile industry with its production facilities located in cotton growing areas of Marathwada and Vidarbha region at Samangaon which is situated in the Jalna district of State of Maharashtra. LCL is the manufacturer of yarn and it has an existing open end and ring spinning unit to cater to the yarn markets in Maharashtra and Gujarat. Its business is spread among home textiles, weaving sector, Denim Manufactures and hosiery manufacturers through open end yarn and ring spun yarn. The company is manufacturing premium quality 100% cotton combed and carded hosiery/ warp conventional, organic and BCI yarn in count range of 30s Ne to 40s Ne for the purpose of exporting to Asian and European countries. LCL has also started its own 'Organic Cotton Farming Project and Better Cotton (BCI) Project' in Jalna District, with 4,750 farmers in 13,200 acre of cultivation land and yield capacity of initially 55,000 quintals Kapas (11,000 BCI certified own ginned cotton bales) that will be further expanded up to 40,000 bales per crop seasons in near future.
For listing benefits the company is coming out with a maiden IPO of 4800000 equity share of Rs. 10 each at a fixed price of Rs. 20 per share as offer for sale to mobilize Rs. 9.60 crore. Issue opens for subscription on 17.03.17 and will close on 22.03.17. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment shares will be listed on NSE SME. Issue is solely lead managed by Hem Securities Ltd and Link Intime India Pvt Ltd is the registrar to the issue. After MoA subscription at par, the company has issued further equity in a price range of Rs. 20 and Rs. 40 per share. It has also issued bonus shares in the ratio of 3 shares for every 2 shares held in March 2010. As this is the offer for sale, paid up equity capital of the company will remain same at Rs. 17.15 crore post issue.
On performance front, the company has posted turnover/net profits of Rs. 102.38 cr. / Rs. 2.25 cr. (FY13), Rs. 115.13 cr. / Rs. 3.79 cr. (FY14), Rs. 106.77 cr. / Rs. 2.26 cr. (FY15) and Rs. 113.57 cr. / Rs. 3.22 cr. (FY16). Thus it has shown inconsistency in top and bottom lines for last four fiscals. For the first half of the current fiscal, it has earned net profit of Rs. 1.93 crore on a turnover of Rs. 52.69 crore. If we annualize the latest earnings and attribute on the equity then asking price is at a P/E of around 8 plus and at P/BV of 0.8 times making it a reasonably priced offer.
On merchant banker’s front, this is the 29th mandates from its stable and last ten mandates have shown positive trends on the listing date.
Conclusion: Investors may consider investment in this issue for medium to long term.
Review By Dilip Davda on March 15, 2017
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. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. 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 their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About 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.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Laxmi Cotspin Limited offers an early investment opportunity in Laxmi Cotspin Limited. A stock market investor can buy Laxmi Cotspin IPO shares by applying in IPO before Laxmi Cotspin Limited shares get listed at the stock exchanges. An investor could invest in Laxmi Cotspin IPO for short term listing gain or a long term.
Read the Laxmi Cotspin IPO recommendations by the leading analyst and leading stock brokers.
Laxmi Cotspin IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Laxmi Cotspin IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Laxmi Cotspin IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Laxmi Cotspin IPO.
The Laxmi Cotspin IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Laxmi Cotspin IPO allotment status to check.
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