Review By on August 30, 2017
Penta Gold Ltd. (PGL) is a retailer, wholesaler and exporter of gold jewellery. It has a retail outlet in Mumbai. PGL export products (gold jewellery studded with diamond) to overseas buyers and also sells to wholesalers domestically. The company primarily sells gold jewellery i.e. Chains, Rings, Bangles, Necklace, Mangalsutra, Bracelet, Earrings and other jewellery studded or non-studded with pearls, diamonds, American diamonds and other precious stones. Further, it also has product line of antique and kundan Jewellery and variety of Italian jewellery products which is famous for its machine designs and light weighted jewellery. PGL majorly procures required gold from various banks and also procures gold and precious stones from local markets.
To part finance its additional working capital and general corporate funds needs, PGL is coming out with a maiden IPO of 3268000 equity shares of face value of Rs. 10 each at a fixed price of Rs. 35 per equity share to mobilize Rs. 11.44 crore. Issue opens for subscription on 04.09.17 and will close on 06.09.17. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Inventure Merchant Banker Services Pvt Ltd and Karvy Computershare Pvt. Ltd. is the registrar to the issue. The issue will constitute 26.37% of the post issue paid up equity share capital of the company. Having issued initial equity at par, it raised further funds in a price range of Rs.40 to Rs. 50 between March 2014 and March 2016. It also issued bonus shares in the ratio of 1 for 1 in December 2016. Post issue its current paid up equity capital of Rs. 9.13 crore will stand enhanced to Rs.12.39 crore.
On performance front, for last four fiscals PGL has posted turnover/net profits of Rs. 838.26 cr. / Rs. 1.38 cr. (FY14), , Rs. 250.02 cr. / Rs. 1.58 cr. (FY15), Rs. 244.92 cr. / Rs. 1.78 cr. (FY16) and Rs. 237.58 cr. / Rs. 1.69 cr. (FY17). Its working for FY 14 posted gigantic top line with no commensurate rise in bottom line. For last three fiscals it has posted an average EPS of Rs. 1.92 and RoNW of 11.96%. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 25 plus and at a P/BV of 2 plus. Peers are trading in the range of 12 to 33 P/Es. Thus issue appears to have been priced aggressively.
On merchant banker's front, this is the 2nd mandate from its stable and last listings although marked opening at a premium, it closed at a discount to offer price on the listing date.
Conclusion: Considering track record and aggressive pricing, there is no harm in giving this IPO a miss.
Review By on August 30, 2017
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 Penta Gold Ltd. offers an early investment opportunity in Penta Gold Ltd.. A stock market investor can buy Penta Gold IPO shares by applying in IPO before Penta Gold Ltd. shares get listed at the stock exchanges. An investor could invest in Penta Gold IPO for short term listing gain or a long term.
Read the Penta Gold IPO recommendations by the leading analyst and leading stock brokers.
Penta Gold IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Penta Gold IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Penta Gold IPO?"
Our recommendation for Penta Gold IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Penta Gold IPO.
The Penta Gold IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Penta Gold IPO allotment status to check.
