R & B Denims Ltd IPO Review (Avoid)

Review By Dilip Davda on Mar 24, 2014

R & B Denims is a Surat based company engaged in denim textile production and marketing. Before this IPO the company issued 1249000 equity shares at a price of Rs. 20 per share on 02.09.11,  415560 equity shares at a price of Rs. 250 per share between 02.12.11 to 27.03.12 and just 10 shares at a price of Rs. 75 on 22.10.12. On the same date it issued bonus in the ratio of 2 for 1. Thereafter, again it issued 3916666 equity shares at a price of Rs. 75 per share between 31.03.13 to 28.06.13 followed by bonus issue in the ratio of 2 for 1 on 09.10.13. Post this issue, company’s existing equity capital of Rs. 10.28 crore will rise to Rs. 13.99 crore. 

Now to reduce its high cost debts, the company is coming out with an IPO of 3710000 equity share of Rs. 10 each at par to mobilize Rs. 3.71 crore. The issue opens for subscription on 28.03.14 and will close on 04.04.14. Minimum application is to be made for 10000 shares and in multiples thereof, thereafter. Issue is lead managed by Hem Securities Ltd and Bigshare Services Pvt. Ltd. is the registrar. Post allotment, shares will be listed on BSE SME.

As the company started its operations in 2012, it achieved a turnover of Rs. 60.59 crore for the fiscal 2012-13 and earned a net profit of Rs. 0.01 crore. For first six months of the current fiscal ended on 30.09.13, it has posted net profit of Rs. 0.13 crore on a turnover of Rs. 43.02 crore. So if we attribute these earnings on annualized basis on the enhanced equity base of Rs. 14 crore then the EPS stands at Rs. 0.19 per share and thus even at par, the asking price is at a P/E of 52+ and at a P/BV of 0.33 (Thanks to issue at hefty premiums as mentioned above).

On merchant banker’s part, it has mixed trends for its past mandate and has done operations in recent SME mandates, which may tempt HNIs. Company’s fundamentals are very poor.


Conclusion / Investment Strategy

The issue that has entry barrier as well is not worth for average investors.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Mar 24, 2014

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

R & B Denims IPO FAQs

  1. 1. Why R & B Denims IPO?

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

  2. 2. How is R & B Denims IPO?

    Read the R & B Denims IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. R & B Denims IPO what should investors do?

    R & B Denims IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the R & B Denims IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is R & B Denims IPO good?

    Our recommendation for R & B Denims IPO is to avoid.

  5. 5. Is R & B Denims IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the R & B Denims IPO.

  6. 6. When will R & B Denims IPO allotment status?

    The R & B Denims IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit R & B Denims IPO allotment status to check.

  7. 7. When will R & B Denims IPO list?

    The R & B Denims IPO will list on Tuesday, April 22, 2014, at BSE SME.

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