Review By on May 7, 2012
Fiscal 2012-13 has begun on a sluggish note as far as primary market is concerned. The first IPO of the fiscal TBZ got scrapped through with 1.15 times subscription, but the mega IPO of Samvadhana Motherson (SMFL) failed to see the light of the day with just 38 per cent subscription on the last day and stood withdrawn due to poor response. Amidst such murky scenario, Plastene India is daring to come out with its IPO.
Plastene India is a flagship company of Champalal Group from Gandhinagar and engaged in plastic packaging materials. The company manufactures a variety of transport and storage containers (Jumbo bags/FIBCs) for both dry and liquid (bulk) goods, woven sack product (used in Chemicals, fertilizers, cement, urea, minerals, resin, polymers and rubber industry), variety of laminates (solvent less / solvent based) structures for food and non-food applications and wide range of high tenacity Polypropylene Multifilament yarn - dope dyed. It has four manufacturing facilities in India located at Gandhidham, Rajpur and Rakanpur in Gujrat. The company exports to around 30 countries deriving close to 49% sales from export market.
The company plans to expand its manufacturing capacity to 64,000 MTPA at an approximate cost of Rs. 53 crore and also setting up a new venture to manufacture 5,000 MTPA block bottom valve bags in Nani Chirai, Kutch at an approximate cost of Rs. 25 crore.To part finance this plans along with general corpus fund raising, the company is issuing 92,55,290 Equity Shares of Rs 10 each (including 55290 shares reserved for employees) for cash in the Price Band of Rs 81 to Rs 84 via book building route. The issue opens on 09.05.12 and will close on 15.05.12. Minimum application is to be made for 75 shares and in multiples thereafter. With this float the company plans to raise Rs. Rs. 74.97 - 77.74 crore based on lower- upper price band. ICRA has assigned IPO Grade 3 to this IPO indicating at average fundamentals of the company. Motilal Oswal Investment Advisor is the sole BRLM and Karvy Computershare is the registrar to the issue. Post issue, shares will be listed on BSE and NSE. The issue consists of 25.89 per cent dilution of the post IPO equity.
On consolidated basis the company posted a net profit of Rs. 21.00 crore on a total turnover of Rs. 520.10 crore translating in to an EPS of Rs. 7.92. For the first ten months of the current fiscal ended on 31.01.12 it has earned net profit of Rs. 10.95 crore on a total turnover of Rs. 379.35 crore translating into an annualized EPS of Rs. 4.96 on old equity. If these earnings are attributed to the enhanced equity post IPO, then it comes to Rs. 5.87 and Rs. 3.68 respectively for last two periods and based on this the asking price is at around 14 and 22 PE respectively, which appears to be costly compared to its close peer which are trading around 3 to 7 PE.
Considering the current market status and higher asking price, it is better to stay away from this issue.
Review By on May 7, 2012
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 Plastene India Ltd. offers an early investment opportunity in Plastene India Ltd.. A stock market investor can buy Plastene India IPO shares by applying in IPO before Plastene India Ltd. shares get listed at the stock exchanges. An investor could invest in Plastene India IPO for short term listing gain or a long term.
Read the Plastene India IPO recommendations by the leading analyst and leading stock brokers.
Plastene India IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Plastene India IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Plastene India IPO?"
Our recommendation for Plastene India IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Plastene India IPO.
The Plastene India IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Plastene India IPO allotment status to check.
