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RDB Rasayans Ltd IPO Review (Avoid)

Review By Dilip Davda on Sep 21, 2011

RDB Rasayaans Ltd. (RDBRL): The Company is promoted by RDB group that has interests in developing Real Estate, Cigarettes, Print & Packaging and warehousing. This company is engaged in engaged in manufacture and sale of FIBC (Jumbo Bags) and Woven Sacks and various woven polymer based products like Container Liners, Protective irrigation system, Canal Liners, etc. PP sacks are mainly used for packing the different products in the fertilizers, cement, polymers, chemicals, textiles, machinery, automobiles and steel industry etc.

RDB Rasayans produces FIBCs of U+2 panel, Circular Jumbo bags, Baffle bags, All panel bags, Conductive FIBC and Static dissipative FIBCs. In addition to FIBC, the Company also manufactures various woven polypropylene products including Small bags, Box woven bags, Roofing under laying fabric, Courier bags, Ground covers, Silt fence and Geotextiles. The Company offers woven bags and fabrics in both PP and HDPE. Its products are UV stabilized and pre-conditioned against shrinkage. Thus although company's name has Rasayaan (that stands for chemicals), it is in the packaging material manufacturing. To part finance its expansion plans and capital expenditure the company is coming out with a book building process IPO with an offer of 4500000 equity share of Rs. 10 each within a price band of Rs. 72-79. The issue opens on 21.09.11 and closes on 23.09.11. Minimum application is to be made for 80 shares and in multiples thereof. Shares will be listed on BSE and NSE.

The issue is lead managed by Chartered Capital and Investment Ltd. that brought six IPOs in the recent past out of which five IPOs gave positive returns on the debut day. Link Intime India Pvt. Ltd is working as registrar to the issue. BRICKWORK has assigned IPO Grade 2 to this IPO indicating at below average fundamentals of the company.


Conclusion / Investment Strategy

On the performance front, the company has posted an average EPS of Rs. 2.51. For the year 2010-11 it posted a net profit of Rs. 1.80 crore on a turnover of Rs. 46.13 crore against net profit of Rs. 1.95 crore on a turnover of Rs. 30.61 crore for 2008-09 indicating at reduced margings. On enhanced equity of Rs. 17.72 crore, this earnings translated into an EPS of Rs.1.01 and based on this the asking price is around 72 P/E on the lower price band and thus it is priced exorbitantly. AVOID investment. 

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 21, 2011

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. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

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

RDB Rasayans IPO FAQs

  1. 1. Why RDB Rasayans IPO?

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

  2. 2. How is RDB Rasayans IPO?

    Read the RDB Rasayans IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. RDB Rasayans IPO what should investors do?

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

  4. 4. Is RDB Rasayans IPO good?

    Our recommendation for RDB Rasayans IPO is to avoid.

  5. 5. Is RDB Rasayans IPO worth Investing?

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

  6. 6. When will RDB Rasayans IPO allotment status?

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

  7. 7. When will RDB Rasayans IPO list?

    The RDB Rasayans IPO will list on Friday, October 7, 2011, at BSE.
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