Riddhi Steel BSE SME IPO Review (Subscribe)

Review By Dilip Davda on Aug 31, 2016

Riddhi Steel and Tube Ltd (RSTL) engaged in the manufacturing of black and galvanized steel pipes in the various sizes having wide application in varied industries including power sector, agro based industries, construction industries, structural, scaffolding, irrigation and engineering industries, air and gas transportation, firefighting applications etc. The company also manufactures steel square hollow sections (SHS) and rectangular hollow sections (RHS) in a various size and thickness.

To meet its working capital and general corpus funds requirement, the company is coming out with a maiden IPO of 2340000 equity share of Rs. 10 each at a fixed price of Rs. 38 per share to mobilize Rs. 8.89 crore. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Issue opens for subscription on 02.09.16 and will close on 07.09.16. Issue is solely lead managed by Guiness Corporate Advisors Pvt Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE SME. Except for few shares being offered at a price of Rs. 40 per share in March 2011, from inception till July 2013, it raised equity at par. Post IPO its present paid up equity capital of Rs. 5.95 crore will stand enhanced to Rs. 8.29 crore.

On performance front, for the last three fiscals, the company has reported turnover/net profit of Rs. 207.27 cr. / Rs. 2.29 cr. (FY14), Rs. 234.97 cr. / Rs. 2.53 cr. (FY15) and Rs. 236.78 cr. / Rs. 2.66 cr. (FY16). If we attribute latest earnings on fully diluted equity post IPO, then asking price is at a P/E of 11 plus against industry composite of 9 plus, thus it has nothing on table for new investors in near term.

On merchant banker’s front, the merchant banker had some issues in the past that stands suspended by watchdog. This is the 22nd mandate from its stable and earlier mandates have shown mixed trends.

Conclusion: Based on latest earnings as per prospectus, the issue appears to be fully priced. However, risk savvy cash surplus investors may consider investment for long term.


Conclusion / Investment Strategy

Based on latest earnings as per prospectus, the issue appears to be fully priced. However, risk savvy cash surplus investors may consider investment for long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Aug 31, 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

Riddhi Steel IPO FAQs

  1. 1. Why Riddhi Steel IPO?

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

  2. 2. How is Riddhi Steel IPO?

    Read the Riddhi Steel IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Riddhi Steel IPO what should investors do?

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

  4. 4. Is Riddhi Steel IPO good?

    Our recommendation for Riddhi Steel IPO is to subscribe.

  5. 5. Is Riddhi Steel IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Riddhi Steel IPO.

  6. 6. When will Riddhi Steel IPO allotment status?

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

  7. 7. When will Riddhi Steel IPO list?

    The Riddhi Steel IPO will list on Wednesday, September 14, 2016, at BSE SME.

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