Sanco Industries Ltd IPO Review (Avoid)

Review By Dilip Davda on Feb 16, 2014

Sanco Industries Ltd. (SIL): The Company was originally incorporated on March 17, 1989 as a private limited company under the name and style of “Sanco Plastics Private Limited” under the Companies Act, 1956 and registered with the ROC, Delhi & Haryana. Over the period, its name was changed to Sanco Industries Ltd. The company manufactures wide range of products such as Rigid PVC conduit pipes, PVC casing & capping, PVC/PP-R Plumbing Pipes, PVC Insulated Domestic Wires & Cables and Copper Wire Rod. These products are supplied to entities in the railways, telecom, agriculture, construction, and irrigation sector. The Company has diversified its manufacturing line from electrical products to sanitary products to reduce market risk by introducing PVC/PPR Plumbing Pipes in its products line in 2008. Since FY 2009-10 our company started the trading operations of PVC resin and other related chemicals also. The manufacturing facility of our Company is located in Paonta Sahib, Himachal Pradesh.

 

Its products are sold under various brand names such as “SATYAM” “VIKRANT”, “MARSHALL”, “SUPERPLAST” and “SANCO”.

 

The company is coming out with a public issue of 2400000 equity share of Rs. 10 each at a fixed price of Rs. 18 per share to mobilize Rs. 4.32 crore to meet expansion cost of its existing project. The issue opens for subscription on 24.02.14 and will close on 26.02.14. Minimum application is to be made for 8000 shares and in multiples thereof, thereafter. Issue is lead managed by Keynote Corporate Services Ltd. and Beetal Financial & Computer Services (P) Ltd is registrar to the offer. On March 30, 2010 it issued bonus shares in the ratio of 1 for 1 and then issued preferential capital of 170000 shares to promoters at a price of Rs. 30 per share on 19.06.2012. Its NAV as on 30.09.13 is Rs. 28.22.  Its current paid up equity will rise from Rs. 6.17 crore to Rs. 8.57 crore post this offer. Shares will be listed on NSE Emerge.

 

On performance front, the company posted an average EPS of Rs. 4.28 for last three fiscals. For first six months ended on 30.09.13 the company earned net profit of Rs. 1.06 crore on a turnover of Rs. 22.74 crore. This translated into an annualized EPS of Rs. 3.43 and if we attribute these earnings on expanded equity then the asking price is at a P/E of 7+. As its NAV is at Rs. 28.22 the offer is at a P/BV of 0.6+.

 

This is the third SME offer mandate for lead manager and forth in last four years with mixed trends with more IPOs failing to give returns to investors in medium to long run.


Conclusion / Investment Strategy

Avoid this offer with entry barrier.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Feb 16, 2014

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

Sanco Industries IPO FAQs

  1. 1. Why Sanco Industries IPO?

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

  2. 2. How is Sanco Industries IPO?

    Read the Sanco Industries IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Sanco Industries IPO what should investors do?

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

  4. 4. Is Sanco Industries IPO good?

    Our recommendation for Sanco Industries IPO is to avoid.

  5. 5. Is Sanco Industries IPO worth Investing?

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

  6. 6. When will Sanco Industries IPO allotment status?

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

  7. 7. When will Sanco Industries IPO list?

    The Sanco Industries IPO will list on Wednesday, March 12, 2014, at NSE SME.








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