Mittal Life NSE SME IPO review (Apply at your own risk)

Review By Dilip Davda on Mar 15, 2018

Mittal Life Style Ltd. (MLSL) is a reputed trading house, dealing in Denim Fabrics. MLSL focuses on sourcing own designs and fabric ranges from various mills and wider distribution in India. Its flexible and responsive trading operations gives it the ability to quickly respond to change in market demand by being able to get production of new designs and weaves in the shortest turnaround times at economical rates through various mills, giving its clients the unbeatable advantage of tapping into the market as the demand peaks. It has one of the biggest stock-supported ranges of denim fabrics in India with over 200 regular sorts stocked.

To part finance its repayment of loans and working capital needs, MLSL is coming out with a maiden IPO of 2100000 equity shares of Rs. 10 each at a fixed price of Rs. 21 per share to mobilize Rs. 4.41 crore. Issue opens for subscription on 19.03.18 and will close on 21.03.18. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment shares will be listed on NSE SME Emerge. Issue is solely lead managed by Sarthi Capital Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 29.79% of the post issue capital of the company. Average cost of acquisition of shares by the promoters is Rs. 3.33, Rs. 5.60 and Rs. 10 per share. Its entire equity is issued at par. It has also issued bonus shares in the ratio of 2 for 1 in January 2015.  Post issue, its current paid up equity capital of Rs. 4.95 crore will stand enhanced to Rs. 7.05 crore.

On performance front, MLSL has posted turnover/net profits of Rs. 32.32 cr. / Rs. 0.01 cr.  (FY14)/ Rs. 46.35 cr./ Rs. 0.01 cr.  (FY15)/ Rs.59.04 cr. / Rs. 0.01 (FY16) and Rs. 78.57 cr. / Rs. 0.34 cr.  (FY17). For first half of the current fiscal, it has earned net profit of Rs. 0.30 cr. on a turnover of Rs. 43.80 cr. For FY14 to FY16 it posted negligible profits. For last three fiscals it has posted an average EPS of Rs. 0.44 and an average RoNW of 3.31%. Issue is priced at a P/BV of 1.98 on the basis of its NAV of Rs. 10.62 as on 31.03.17 and at a P/BV of 1.53 on the basis of its post issue NAV of Rs. 13.71. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 24 plus. It has no listed peers to compare with. Based on working, it appears that it has poor margins and issue is priced aggressively.

On the merchant banker’s front, this is the 31st mandate in last three fiscals. Out of last 10 listings, 2 opened at discount to offer price, 2 at par, 5 with a premium ranging from 4% to 20% and 1 main board IPO with a premium of 140% on the listing day.


Conclusion / Investment Strategy

Aggressive pricing couples with listless performance makes this issue a risky bet. Cash surplus risk savvy investors may consider it for long term at their own risk

Review By Dilip Davda on Mar 15, 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

Mittal Life Style Ltd IPO FAQs

  1. 1. Why Mittal Life Style Ltd IPO?

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

  2. 2. How is Mittal Life Style Ltd IPO?

    Read the Mittal Life Style Ltd IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Mittal Life Style Ltd IPO what should investors do?

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

  4. 4. Is Mittal Life Style Ltd IPO good?

    Sorry, we didn't rate the Mittal Life Style Ltd IPO.

  5. 5. Is Mittal Life Style Ltd IPO worth Investing?

    Our lead analyst Mr. Dilip Davda didn't rate the Mittal Life Style Ltd IPO.

  6. 6. When will Mittal Life Style Ltd IPO allotment status?

    The Mittal Life Style Ltd IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Mittal Life Style Ltd IPO allotment status to check.

  7. 7. When will Mittal Life Style Ltd IPO list?

    The Mittal Life Style Ltd IPO will list on Monday, April 2, 2018, at NSE SME.








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