Review By on March 4, 2014
As we all know, in mid February, first main line IPO of Maiam Global Foods Ltd. made announcement of its issue from 20.02.14, but just ahead of its road shows, is announce postponement of the same and raised eyebrows in primary market operators. Now we have one more main line IPO reports.
The Loha group is over Rs.3400 Cr. turnover conglomerate and has multi-location, multi-product business empire. Its flagship company Loha Ispaat Ltd. is coming out with its maiden public issue. Details of the same are as under:
Loha Ispaat Ltd. (LIL) is one of the organized Independent Steel Service Centers in India having an existing client base of over 500 customers Pan India, making it a major player in the flat steel product (i.e. HR and CR Coils, Sheets and Plates) markets in India. The company operate as an Independent Steel Service Centre that purchases raw materials like Hot Rolled Coils, HRPO, Cold Rolled Coils, CRCA, HR Chequered Coils etc. from steel manufacturers and converts them into various shapes and forms through Decoiling / Recoiling, Slitting, Shearing, Cut to Length and other value additions such as Pickling, Oiling, CNC Plasma Cutting, Profiling, Roll Forming, (Trapezoidal, Corrugated), Bell Annealing, Rewinding, Cold Rolling Mill, Skin pass Mill, Trapezoidal Cutting, Gas Cutting etc.
It serves an important function as an intermediary between primary metal producers that generally sell large volumes of limited sizes and configurations, and end-users that require efficient services and economical quantities of customized products. The product portfolio of the company includes diversified product range which includes variety of grades, thickness, widths and standards, in HR, CR, HRPO, CRCA, Galvanized coils and plates, Chequered Coils & plates, Trapezoidal Blank etc. The company is augmenting expansion in its Khopoli and Taloja plants. To meet its working capital post expansion and other corpus funds, the company is coming out with a public issue of 26705476 equity share of Rs. 10 each under book building process within a price band of Rs. 77 - 80 per share to mobilize around Rs. 205 cr. The issue is opening for subscription on 11.03.14 and will close on 20.03.14. Longer duration of issue has surprised one and all. CARE has assigned 'IPO Grade 3' to this issue indicating average fundamentals of the company. Issue is lead managed by Aryaman Financial Services Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Post allotment, shares will be listed on BSE and NSE. Minimum application is to be made for 175 shares and in multiples thereof, thereafter. Post this issue, its present equity capital of Rs. 74.29 crore will stand enhanced to Rs. 101 crore.
On performance part, LIL posted an average EPS of Rs. 8.46 for last three fiscals on unconsolidated basis. For first six months ended 30.09.13 it has earned net profit of Rs. 34.47 crore on a turnover of Rs. 1957.92 crore translating into annualized EPS of Rs. 9.27 on existing equity. If we attribute these earnings on expanded equity of Rs. 101 crore, then EPS stands at Rs. 6.83 and thus asking price is at a P/E of 11+ and at a P/BV of around 1 based on its unconsolidated current NAV of Rs. 76.70. On 14.11.2008 it issued 1.5 crore bonus shares. Thereafter between 15.12.2008 to 31.12.2012 it issued around 1.16 crore preferential shares within a price range of Rs. 100 to Rs. 500 per share and then again between 24.12.2013 to 04.02.2014 it issued around 35 lakh shares at a price of Rs. 78 per share.
On merchant banker's front, it has poor track records for past mandates. As SEBI has now kept 'Safety Net' voluntary for IPOs, this issue is not having it and thus makes it a risky bet.
Review By on March 4, 2014
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of Loha Ispaat Ltd. offers an early investment opportunity in Loha Ispaat Ltd.. A stock market investor can buy Loha Ispaat IPO shares by applying in IPO before Loha Ispaat Ltd. shares get listed at the stock exchanges. An investor could invest in Loha Ispaat IPO for short term listing gain or a long term.
Read the Loha Ispaat IPO recommendations by the leading analyst and leading stock brokers.
Loha Ispaat IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Loha Ispaat IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Loha Ispaat IPO?"
Our recommendation for Loha Ispaat IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Loha Ispaat IPO.
The Loha Ispaat IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Loha Ispaat IPO allotment status to check.
