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Radhika Jeweltech BSE SME IPO review (Avoid)

Review By Dilip Davda on Sep 13, 2016

Radhika Jeweltech Ltd (RJL) is a well known and trusted jewellery retailer having showroom on Palace Road, Rajkot, the main market for buying Jewellery. It primarily sell gold jewellery and diamond studded Jewellery. The design and manufacture of products is done either in house or by third parties on job work basis. RJL's products have presence across different price points to cater to all customers across high-end, mid-market and value market segments.

Apart from own Jewellery the company is also dealing in trading of branded jewellery. The Company deals only in jewelry certified by BIS Hallmark. Since the system of hallmarking was legally introduced, Radhika Jewellers had been certified under the system. The quality Assurance department monitors and examines the jewelry designs inward in the stock to match the standard, thus the quality standard of gold jewelry dealt with is maintained throughout.

To part finance its working capital requirements and general corpus funds, the company is coming out with a maiden IPO of 6600000 equity shares of Rs. 10 each at a fixed price of Rs.75 per share to mobilize Rs. 49.50 crore. Issue is solely managed by Corporate Strategic Allianz Ltd and Satellite Corporate Services Pvt Ltd is the registrar to the issue. Issue opens for subscription on 14.09.16 and will close on 20.09.16. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter. Its entire current equity is issued on 'other than cash' basis. Post issue its paid up capital will stand enhanced from Rs. 17.00 crore to Rs. 23.60 crore. Post allotment, shares will be listed on BSE SME.

On performance front, for last two year's its turnover /net profits were Rs. 133.70 cr. / Rs. 2.60 cr. (FY15), Rs. 137.16 cr. / Rs. 1.97 cr. For the current fiscal, till 22.07.16 it has posted turnover of Rs. 31.56 cr. with a net profit of Rs.0.54 cr. If we attribute latest earnings on fully diluted equity post IPO then asking price is at a 100 P/E that makes it a highly priced issue. Other listed peers are trading around 7 to 36 P/E.

On merchant banker's front, this is the seventh issue from its stable and earlier issues, most of them have shown dismal performance post listing.

Conclusion: No harm in giving this IPO a miss.


Conclusion / Investment Strategy

No harm in giving this IPO a miss. The asking price is at a 100 P/E that makes it a highly priced issue. Other listed peers are trading around 7 to 36 P/E.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 13, 2016

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

Radhika Jeweltech IPO FAQs

  1. 1. Why Radhika Jeweltech IPO?

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

  2. 2. How is Radhika Jeweltech IPO?

    Read the Radhika Jeweltech IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Radhika Jeweltech IPO what should investors do?

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

  4. 4. Is Radhika Jeweltech IPO good?

    Our recommendation for Radhika Jeweltech IPO is to avoid.

  5. 5. Is Radhika Jeweltech IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Radhika Jeweltech IPO.

  6. 6. When will Radhika Jeweltech IPO allotment status?

    The Radhika Jeweltech IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Radhika Jeweltech IPO allotment status to check.

  7. 7. When will Radhika Jeweltech IPO list?

    The Radhika Jeweltech IPO will list on Tuesday, September 27, 2016, at BSE SME.