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Review By Dilip Davda on September 12, 2017
R M Drip & Sprinklers System Ltd. (RMD) is engaged in manufacture and sale of Micro Irrigation System (MIS) consisting of drip irrigation system and sprinkler irrigation system along with its components, irrigation accessories and allied products. RMD's revenue mix comprises of open market and project market models. Majority of its revenue comes from open market with the help of channel partners. RMD operates in states of Maharashtra, Gujarat, Karnataka and MP. Company's product range include HDPE Pipes, Pipes Fittings and Irrigation Equipments including drip/sprinkler systems, Disc filters, Screen filters, Hydro-Cyclone filters, Sand (Gravel) filters, Compression fittings, valves (Electric & Mechanical), Fertilizer Tanks etc.
To part finance working capital and general corpus fund needs, RMD is coming out with a maiden IPO of 2010000 equity share of Rs. 10 each via book building route with a price band of Rs. 53 – 57 per share to mobilize Rs. 10.65 cr. to Rs. 11.46 crore (based on lower and upper price bands). Issue opens for subscription on 19.09.17 and will close on 25.09.17. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 30.04% of the fully diluted post issue paid up capital of the company. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Having raised most of its equity at par, it also issued shares at a price of Rs. 20 per share in October 2014 and has issued bonus shares in the ratio of 15 for 1 in September 2014, 0.7 to 1 in November 2014, 2.6 to 1 in July 2017. Post issue, its current paid up equity capital of Rs. 4.68 crore will stand enhanced to Rs. 6.69 crore.
On performance front, RMD has reported turnover/net profits of Rs. 3.10 cr. / Rs. 0.03 cr. (FY14), Rs. 5.78 cr. / Rs. 0.24 cr. (FY15), Rs. 11.79 cr. / Rs. 0.32 cr. (FY16) and Rs. 28.73 cr. / Rs. 1.36 cr. (FY17). If we attribute latest earnings on fully diluted equity post issue then asking price is at a P/E of 28 plus (on the basis of upper price band) against industry average of 35 plus. For last three fiscals, it has posted average EPS of Rs. 2.68 and average RoNW of 24.96%. Issue is priced at a P/BV of 4.3 plus. Thus issue is fully priced.
On merchant banker's front, this is the 45th mandate in last three years. Out of last 10 recent listings, 1 opened at discount, 1 at par and the rest with 1 to 18% premium on IPO price.
Conclusion: Cash surplus investors may consider investment for long term.
Review By Dilip Davda on September 12, 2017
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. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. 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 their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About 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.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of R M Drip & Sprinklers Systems Ltd offers an early investment opportunity in R M Drip & Sprinklers Systems Ltd. A stock market investor can buy R M Drip IPO shares by applying in IPO before R M Drip & Sprinklers Systems Ltd shares get listed at the stock exchanges. An investor could invest in R M Drip IPO for short term listing gain or a long term.
Read the R M Drip IPO recommendations by the leading analyst and leading stock brokers.
R M Drip IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the R M Drip IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for R M Drip IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the R M Drip IPO.
The R M Drip IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit R M Drip IPO allotment status to check.
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