Sagardeep Alloys NSE SME IPO review (Avoid)

Review By Dilip Davda on Apr 30, 2016

Sagardeep Alloys Ltd. (SAL) that started its operations in the trading of SS Scrap, Copper, Aluminum, S.S. Patta and Brass etc is now engaged in the manufacturing of Copper Pipes, Flats, Coils, Rods, Plates and Copper Alloys Consumables and trading of Ferrous and Non ferrous Metals and alloys. Company’s products are industrial in nature and are utilized in various industries such as Air Conditioning and Refrigeration, Engineering & Gas Application etc. SAL’s clientele list includes some reputed Govt. undertakings, Public Sector undertakings and Engineering Giants.

To meet long term working capital requirements and other general corpus funds needs, the company is coming out with a maiden IPO of 3000000 equity share of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 6.00 crore. Issue opens for subscription on 04.05.16 and will close on 09.05.16. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Issue is solely managed by Chartered Capital and Investment Ltd and Link Intime India Pvt Ltd is the registrar to the issue. The company issued equity at par in the year 2007 and2009. In the year 2010 it issued further equity at a price of Rs.50 per share and in 2011 at a price of Rs. 62.50. On March 22, 2012 it issued bonus in the ratio of 295 for 100 and on March 29, 2012 it issued further equity at a price of Rs. 50 per share. Post IPO its current paid up equity capital of Rs. 8.37 crore will stand enhanced to Rs. 11.37 crore. Post allotment, shares will be listed on NSE SME (Emerge).

On performance front, the company has (on a standalone basis) reported turnover/net profit of Rs. 178.71 cr. / Rs. 1.88 cr. (FY12), Rs. 200.56 cr. / Rs. 0.64 cr. (FY13), Rs. 155.62 cr./ Rs. 0.66 cr. (FY14) and Rs. 132.65 cr. / Rs. 0.68 cr. (FY15). For first nine months ended 31.12.15 it has posted net profit of Rs. 0.25 crore on a turnover of Rs. 91.08 crore. If we annualize these earnings and attribute on fully diluted equity post IPO then asking price is at a P/E of 68 plus thus it is aggressively priced. Its revenue has see declining trends for past three years.

On merchant banker’s front, it appears that this is the first SME IPO. The merchant banker had no issues in last three years as stated in prospects. But this merchant banker has few main board IPOs/ right issues to its credit in the past that have shown mixed trends. Merchant banker’s website is silent on this aspect.


Conclusion / Investment Strategy

Considering non encouraging performance and the aggressive pricing, there is no harm in giving it a miss. However, risk savvy investors with cash surplus may consider it for long term.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Apr 30, 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

Sagardeep Alloys IPO FAQs

  1. 1. Why Sagardeep Alloys IPO?

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

  2. 2. How is Sagardeep Alloys IPO?

    Read the Sagardeep Alloys IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Sagardeep Alloys IPO what should investors do?

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

  4. 4. Is Sagardeep Alloys IPO good?

    Our recommendation for Sagardeep Alloys IPO is to avoid.

  5. 5. Is Sagardeep Alloys IPO worth Investing?

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

  6. 6. When will Sagardeep Alloys IPO allotment status?

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

  7. 7. When will Sagardeep Alloys IPO list?

    The Sagardeep Alloys IPO will list on Tuesday, May 17, 2016, at NSE SME.

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