Lexus Granito NSE SME IPO review (Apply)

Review By Dilip Davda on Aug 3, 2017

Lexus Granito (India) Ltd (LGL) is engaged in manufacturing, trading and marketing of vitrified ceramic tiles and wall tiles for domestic and international markets. LGL was outsourcing wall tiles so far, but now it has set up its own wall tiles manufacturing unit. Company is ISO 9001:2008 certified producer of quality products.

To part finance its working capital and general corpus fund needs, the company is coming out with a maiden IPO of 5760000 equity shares of Rs. 10 each via book building route with a price band of Rs. 41-45 to mobilize Rs. 23.62 to Rs. 25.92 crore (based on lower and upper price band). Issue opens for subscription on 09.08.17 and will close on 11.08.17. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment shares will be listed on NSE SME Emerge. Issue has reservation of 30% for QIBs, 35% for HNIs and 35% for retail categories. Issue is solely lead managed by Pantomath Capital Advisors Pvt Ltd and Bigshare Services Pvt Ltd is the registrar to the issue. Issue constitutes 30% of the fully diluted post issue paid up capital of the company. After initial equity at par for MoA, it raised further equity in a price range of Rs. 20 to Rs. 80 from March 2011 to October 2016. Post issue, its current paid up equity capital of Rs. 13.43 crore will stand enhanced to Rs. 19.19 cr.

On performance front, the company has posted turnover/net profits of Rs. 59.25 cr. / Rs. 0.32 cr. (FY14), Rs. 80.901 cr. / Rs. 2.03 cr. (FY15), Rs. 102.27 cr. / Rs. 3.20 cr. (FY16) and Rs. 164.73 cr. / Rs. 5.09 cr. (FY17). Thus it has shown continued progress in top and bottom lines. However, in FY17 its profit included Rs. 3.57 crore extraordinary item. In absence of it net profit is lower than previous year despite higher top line. LGL is exporting its products to 20 countries. Nearly two third of its revenue comes from export markets. Its last three fiscal’s average EPS is 2.89 and RoNW is 11.46% and at a P/BV of 1.78. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of about 17 (based on higher price band), against peer trading at a P/E of 77. Main board listed companies in this segment are trading at a P/E of 32 plus. But if we remove extraordinary item and attribute it on fully diluted equity then asking price is at a P/E of 56 making it fully priced.

On merchant banker’s front, this is the 42nd mandate from its stable and out of last 10 listings, one opened at par with offer price and nine gave positive opening on the listing day.

Conclusion: Considering the prospects for tiles industry amidst more spending scenario for realty sector going forward, investment in this offer may be considered for long term. (Subscribe).


Conclusion / Investment Strategy

Considering the prospects for tiles industry amidst more spending scenario for realty sector going forward, investment in this offer may be considered for long term. (Subscribe).

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Aug 3, 2017

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

Lexus Granito IPO FAQs

  1. 1. Why Lexus Granito IPO?

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

  2. 2. How is Lexus Granito IPO?

    Read the Lexus Granito IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Lexus Granito IPO what should investors do?

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

  4. 4. Is Lexus Granito IPO good?

    Our recommendation for Lexus Granito IPO is to subscribe.

  5. 5. Is Lexus Granito IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Lexus Granito IPO.

  6. 6. When will Lexus Granito IPO allotment status?

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

  7. 7. When will Lexus Granito IPO list?

    The Lexus Granito IPO will list on Wednesday, August 23, 2017, at NSE SME.

3 Comments

Purushottam
3. Purushottam  Aug 11, 2017 05:49
When the company gets bigger to add some zeroes the common man should consider participation. The debacle of SISlisting is before us. So far the promoters, participants and the recommender appear to be Appanwalas of the same area so what will happen to profits is obvious. Be careful. Anyways, the issue is full so save the money for CPSE Bharat ETF.
Dilip Davda
2. Dilip Davda  Aug 9, 2017 19:31
I had sent some querry to Lexus Management for which I got the following reply. I am giving it below for the benefit of our patrons

Respected Sir

I request your clarification on the following points

1. While going through your prospectus, I noticed other income of Rs. 3.57 crore for FY 17, what is it about?
Security deposit forfeited of a party for non performance of contract. However while calculating EPS, this income has not been considered

2. Your RHP is filed on 01.08.17 but there is no mention about the flood in Morbi area and its impact on the company.
The flood did not had a heavy impact on our operations. And in external risk factors we have mentioned about how natural disasters may impact our operations

3. Will your domestic and export market ratio will remain same going forward?
The ratio shall be same.

4. What will be the impact of GST?
Impact of GST is miniscule as before Excise & VAT was 27.5% cumulatively and now it is 28%. Infact GST impact is positive because now construction material is also eligible for Input tax credit.

--
With Regards,

Dilip Fultariya
CFO
Lexus Granito (India) Ltd.
JKG
2.1. JKG  Aug 9, 2017 21:05
Sir it''s humble request Please ask same kind of questions to Shanti Overseas Promoters

Regard
JKG
1. JKG  Aug 9, 2017 20:58
Sir it''s humble request Please ask same kind of questions to Shanti Overseas Promoters

Regard








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