Chittorgarh.com Logo
Loading...

Ratnabhumi Developers BSE SME IPO review (Avoid)

Review By Dilip Davda on Nov 30, 2017

Ratnabhumi Developers Ltd. (RDL) is engaged in acquiring land, carrying out construction work, developing and organizing of immovable properties etc. From 2012 to 2017 it handled selling, marketing, renting of property called ?Ratna- TURQUOISE’ developed by it. Company’s business verticals are classified as revenue from commercial projects, trading in plot of land, rental income and investment/trading in residential schemes. ?

To part finance its acquisition of land/plot of land and other strategic initiatives, 45% contribution towards capital stake in Rajul Projects LLP, general corpus fund needs, RDL is coming out with a maiden IPO of 3700000 equity shares of Rs. 10 each at a fixed price of Rs. 63 per share to mobilize Rs.23.31 crore. Issue opens for subscription on 04.12.17 and will close on 06.12.17. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 27.01% of the post issue paid up capital of the company. Issue is solely lead managed by Corporate Capital Ventures Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. It has issued equity at par in 2006 and 2009 and has also issued bonus shares in the ratio of 19 for 1 in October 2017. Post issue, its current paid up equity capital of Rs. 10.00 crore will stand enhanced to Rs. 13.70 crore. The average cost of acquisition of shares by promoters is Rs. 0.50 per share.

On performance front, RDL has reported turnover/net profits of Rs. 6.30 cr. / Rs. 0.31 cr. (FY14), Rs. 7.56 cr. / Rs. 1.09 cr. (FY15), Rs. 7.76 cr. / Rs. 1.59 cr. (FY16) and Rs. 9.81 cr. / Rs. 1.35 cr. (FY17). It marked setback in bottom line for FY17. For Q1 of current fiscal, it has posted net profit of Rs. 0.07 cr. on a turnover of Rs. 0.18 cr. For last three fiscals it has posted an average EPS of Rs. 27.71 and average RoNW of 15.19% on a paid up equity capital of Rs. 0.50 cr. Asking price is at a P/BV of 6.18 on post bonus NAV (Average EPS stands at Rs. 1.39 on post bonus basis). P/BV stands at 2.57 on the basis of post issue NAV. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 315 which is indicating exorbitant pricing of the issue. Peers are trading at a P/E ranging from 29 to 40. Even if we take FY17 figures, then also asking price is at a P/E of 64 plus, which is pretty high.

On merchant banker’s front, this is the second mandate from its stable and the last listing opened at a premium of around 7% of the offer price, but trading at a discount currently.

Conclusion: There is no harm in giving this highly priced issue a miss. (Avoid)


Conclusion / Investment Strategy

There is no harm in giving this highly priced issue a miss. (Avoid)

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Nov 30, 2017

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

Ratnabhumi Developers IPO FAQs

  1. 1. Why Ratnabhumi Developers IPO?

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

  2. 2. How is Ratnabhumi Developers IPO?

    Read the Ratnabhumi Developers IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Ratnabhumi Developers IPO what should investors do?

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

  4. 4. Is Ratnabhumi Developers IPO good?

    Our recommendation for Ratnabhumi Developers IPO is to avoid.

  5. 5. Is Ratnabhumi Developers IPO worth Investing?

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

  6. 6. When will Ratnabhumi Developers IPO allotment status?

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

  7. 7. When will Ratnabhumi Developers IPO list?

    The Ratnabhumi Developers IPO will list on Thursday, December 14, 2017, at BSE SME.