Review By MLR Securities Private Ltd on Jun 20, 2011
Issue Date: 20th to 23rd June
Price Band: INR 63 to 72
Issue Size: INR 381 mn
Mcap: INR 972 mn
Public Holding: 37.5% (Post Issue)
IPO Grading: ICRA IPO Grade 2/5
BRLM: Corp. Strategic Allianz
RDL is into the manufacturing and marketing of Laminated Sheets. The company has an installed capacity of 30 LPA sheets. RDL has also set up a Plain Particle (PP) Board manufacturing unit in the year 2009 with an annual capacity of 1,376,000 sq mt and has plans to set up a Medium Density Fibre (MDF) Board manufacturing unit with an annual capacity of 90,000 cu mt. The project cost of the MDF Board manufacturing unit is INR 73.4 cr and will be funded by INR 44 cr of debt and the rest through issue proceeds.
At the average of the price band (INR 67.5), the stock is valued at 11.8x annualized EPS of INR 5.7 for 9mth ended Dec'10. The capacity utilization in Laminate Sheet segment has been stagnant at around 75% for last four years, also the PP Board segment is operating at low capacity utilization rates. The company expects the MDF unit to be operational by Oct'11, however the MDF unit is also likely to operate at low capacity utilization rates. Hence there is a significant threat to EPS post Equity Dilution.
Review By MLR Securities Private Ltd on Jun 20, 2011
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