Penta Gold NSE SME lPO review (Apply at your own risk)

Review By Dilip Davda on Mar 21, 2018

Penta Gold Ltd. (PGL) is a retailer, wholesaler and exporter of gold jewellery. It has a retail outlet in Mumbai. PGL primarily sell 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.

To part finance its working capital and general corpus fund needs, PGL is coming out with a maiden IPO of 3600000 equity shares of Rs. 10 each at a fixed price of Rs.37 per share to mobilize Rs. 13.32 crore. Issue opens for subscription on 23.03.18 and will close on 27.03.18. 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 is solely lead managed by Inventure Merchant Banker Services Pvt. Ltd. and Karvy Computershare Pvt. Ltd. is the registrar to the issue. Issue constitutes 28.29% of the post issue paid up capital of the company. Having raised initial equity at par, it raised further equity in the price range of Rs. 40 and Rs. 50 per share and has also issued bonus shares in the ratio of 1 for 1 in December 2016. Average cost of acquisition of shares by the promoters is Rs. 9.59 per share. Post issue, its current paid up equity capital of Rs. 9.13 cr. will stand enhanced to Rs. 12.73 cr.

This company earlier tried to mobilize funds in the month of September 2017 at a price of Rs. 35 per share, but withdrew its plan at that time. Issue that opened on 04.09.17 stood withdrawn on 12.09.17. At that time, my assessment was “Avoid”.

On performance front, PGL 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). For first half of current fiscal, it has earned net profit of Rs.1.31 cr. on a turnover of Rs. 110.48 crore which appears to be a window dressing before IPO. For last three fiscals, it has posted an average EPS of Rs.1.92 and an average RoNW of 11.96%. Issue is priced at a P/BV of 1.98 on the basis of its NAV of Rs.18.69 as on 30.09.17 and at a P/BV of 1.62 on the basis of post issue NAV of Rs. 22.85. It has shown declining trends in top line and marginal increase in bottom lines. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 18. First half net profit is a bit surprising one. It has shown DP Abhushan, Vaibhav Global and Renaissance as its peers that are trading at a P/E of around 31 , 59 and 18 respectively. (as on 20.03.18) and industry average P/E is around 39.

On merchant banker’s front, this is 7th mandate from its stable and out of last 6 listings, 4 closed below the offer price and two with a marginal premium below 1% on the day of listing (as per offer documents).


Conclusion / Investment Strategy

This Company tried for its maiden IPO in September 2017, but was withdrawn. Its financial performance is not remarkable one. Prevalent dull sentiment for the sector following recent scam is also a concern. Hence cash surplus risk savvy investors may consider investment for long term.

Review By Dilip Davda on Mar 21, 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

Penta Gold IPO FAQs

  1. 1. Why Penta Gold IPO?

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

  2. 2. How is Penta Gold IPO?

    Read the Penta Gold IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Penta Gold IPO what should investors do?

    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 in the above answer.

  4. 4. Is Penta Gold IPO good?

    Sorry, we didn't rate the Penta Gold IPO.

  5. 5. Is Penta Gold IPO worth Investing?

    Our lead analyst Mr. Dilip Davda didn't rate the Penta Gold IPO.

  6. 6. When will Penta Gold IPO allotment status?

    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.

  7. 7. When will Penta Gold IPO list?

    The Penta Gold IPO will list on Wednesday, April 25, 2018, at NSE SME.








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