Zerodha - Open Online Account

Lamxi Goldorna NSE SME IPO review (Others)

Review By Dilip Davda on Mar 18, 2020


•    LGHL that was primarily in Gold ornament business has now diversified into real estate.
•    Financial data shows inconsistency in bottom lines.
•    Both segments are fragmented and there are many unorganized players.
•    Based on FY20 earnings, the issue is priced aggressively.

ABOUT COMPANY:
Laxmi Goldorna House Ltd. (LGHL) is an ISO 9001:2015 certified Company and has started its journey in the year 2010 with the business of gold jewellery and ornaments which includes wholesale and retail trading of all types of jewellery items. Also, the company processes some of its jewellery through job work. With continuous growth in jewellery and ornaments business, it has diversified its business activity in real estate in the year 2017 which includes the construction of commercial and residential Projects by adding real estate business in its main Object in Memorandum of Association. Thus the company has diversified into the unrelated business that is crippled with many issues that have dented the sentiment for real estate counters.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its needs for working capital (Rs. 7.00 cr.) and general corpus fund (Rs. 0.88 cr.), LGHL is coming out with a maiden IPO of 5520000 shares of Rs. 10 each at a fixed price of Rs. 15 per share to mobilize Rs. 8.28 cr. The issue opens for subscription on 20.03.20 and will close on 26.03.20. Minimum application is to be made for 8000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 26.45% of the post issue paid-up capital of the company.

The issue is solely lead managed by Beeline Broking Ltd. while KFin Technologies Pvt. Ltd. is the registrar to the issue. Beeline Broking Ltd. is also acting as a market maker for this IPO. LGHL is spending Rs. 0.40 cr. for this IPO process. Post issue LGHL's current paid-up equity capital of Rs. 15.35 cr. will stand enhanced to Rs. 20.87  cr. It mulls a market cap of Rs. 31.31 cr. post this issue.

Having issued initial equity at par, LGHL has also issued/converted equity shares in the price range of Rs. 50 to Rs. 65 between March 2010 and September 2017. It has also issued bonus shares in the ratio of 4 shares for every 1 share held in August 2017. The average cost of acquisition of shares by the promoters is Rs. 9.64 and Rs. 15.16 per share.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, LGHL has reported turnover/net profits of Rs. 52.43 cr. / Rs. 0.58 cr. (FY17), Rs. 69.77 cr. / Rs. 0.44 cr. (FY18) and Rs. 73.45 cr. / Rs.  0.67. (FY19). For the first half of FY20, it has earned a net profit of Rs. 0.40 cr. on a turnover of Rs. 38.78 cr. Despite the growth in top lines, the bottom line has shown inconsistency.

For the last three fiscals, LGHL has posted an average EPS of Rs. 1.78 and an average RoNW of 4.33%. The issue is priced at a P/BV of 1.01 based on its NAV of Rs. 15.12 as on 30.09.19 as well as post issue NAV of Rs. 15.09. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 39 making it aggressively priced. LGHL has not declared any dividend in the past five financial years.

COMPARISION WITH LISTED PEERS:
As per offer documents, LGHL has shown Vaibhav Global and Narbada Gems as its listed peers. They are currently trading at a P/Es of around 81 and 9 (as on 18.03.20). However, they are not strictly comparable on an apple to apple basis.

MERCHANT BANKER'S TRACK RECORD:
On merchant banker's front, this is the 5th mandate from its stable. All the last four listings have opened at premiums ranging from 1.37% to 10% on the day of listings.


Conclusion / Investment Strategy

LGHL is in highly competitive and high volume - low margin business of gold ornaments as well as the lagging real estate segments. While the gold jewellery business is a highly fragmented segment with a large number of unorganized players, realty sector too is overcrowded. Based on the financial issue is aggressively priced. While others can avoid, risk savvy - cash surplus investors may consider investment at their own risk.

Review By Dilip Davda on Mar 18, 2020

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 prior to making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

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

Laxmi Goldorna IPO FAQs

  1. 1. Why Laxmi Goldorna IPO?

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

  2. 2. How is Laxmi Goldorna IPO?

    Read the Laxmi Goldorna IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Laxmi Goldorna IPO what should investors do?

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

  4. 4. Is Laxmi Goldorna IPO good?

    Sorry, we didn't rate the Laxmi Goldorna IPO.

  5. 5. Is Laxmi Goldorna IPO worth Investing?

    Our lead analyst Mr. Dilip Davda didn't rate the Laxmi Goldorna IPO.

  6. 6. When will Laxmi Goldorna IPO allotment status?

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

  7. 7. When will Laxmi Goldorna IPO list?

    The Laxmi Goldorna IPO will list on Thursday, April 16, 2020, at NSE SME.

Comments

No comments found. Be the first to post a comment.







Search Chittorgarh.com:

Download Our Mobile App

Android App iOS App