Review By on December 23, 2014
NCML Industries Limited (NCML) is one of the flagship Company of NCML group that has a total annual turnover of Rs. 2750 crore plus for the fiscal concluded. It ventured into the business of edible oils way back in 2000 and currently has four brands for its products- “MAANIK” for Soya-bean oil, “SHAN” for Palm oil and “MOTI” – “PEARL” for Mustard oil with a total capacity of 600 TPD refining. It also ventured into wind mill power generation. NCML is currently north centric edible oil company and now plans to expand its footprint on PAN India basis. It has enhanced its manufacturing revenues and lowered trading volumes in past three years.
In order to get its scrip listed on BSE and NSE the company is coming out with an offer for sale of 6000000 equity share of Rs. 10 each via book building process. The offer has price band of Rs. 100-120 and thus the company will mobilize around Rs. 60-72 crore that will go to the existing stakeholders. Issue opens for subscription on 29.12.14 and will close on 02.01.2015. Minimum application is to be made for 125 shares and in multiples thereon, thereafter. This offer has received “IPO Grading 3” from ICRA indicating “average fundamentals” of the company. Issue is solely managed by Corporate Strategic Allianz Ltd and Satellite Corporate Services Pvt Ltd is the registrar to the issue. The offer constitutes 25.48% dilution of equity.
On performance front, on consolidated basis , NCML has clocked in net profit of Rs.6.64 crore on a turnover of Rs. 881.70 crore for three months ended 30.06.14. For earlier two fiscals on consolidated basis it has posted an average EPS of Rs. 22.31. The nature of business of the company is high volume, low margin kind and is in FMCG sector. Based on Q1 of current fiscal earnings if we attribute it on annualized basis on the current equity, then the asking price is at a P/E of 8.87 to 10.6 based on lower and upper price band. Company’s current equity is of Rs. 23.55 crore that consists two bonus issues made in the month of October 2010 in the ratio of 3 for 1 (on 10.10.10) and then 1 for 2(on 31.10.10) and preferential equity issued at a price of Rs. 125 a share during March 2009 – March 2012 as well as at a price of Rs. 90 per share in July-Sept 2012. This has helped it to register NAV of Rs. 133 plus as on 31.3.14 that went up to Rs. 136 plus as on 30.06.14. Thus on P/BV it is just below 1. Thus offer is below industry composite P/E of 13 and looks reasonable, but IPO grade 3 indicating average fundamentals looms large. This IPO has neither safety net nor any discount for retail investors.
As far as BRLM is concerned, this is 6th mandate from it. Earlier five mandates have mixed performance.
Cash surplus investors may consider modest investment at lower price band for long term.
(Disclaimer: Author has no plans to invest in this IPO)
Review By on December 23, 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 NCML Industries Ltd. offers an early investment opportunity in NCML Industries Ltd.. A stock market investor can buy NCML Industries IPO shares by applying in IPO before NCML Industries Ltd. shares get listed at the stock exchanges. An investor could invest in NCML Industries IPO for short term listing gain or a long term.
Read the NCML Industries IPO recommendations by the leading analyst and leading stock brokers.
NCML Industries IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the NCML Industries IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is NCML Industries IPO?"
Our recommendation for NCML Industries IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the NCML Industries IPO.
The NCML Industries IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit NCML Industries IPO allotment status to check.
