Shree Ram Proteins NSE SME IPO review (Avoid)

Review By Dilip Davda on Jan 17, 2018

Shree Ram Proteins Ltd. (SRPL) is engaged in the business of de-linting and de-hulling of cotton seeds by mechanical process, oil extraction from cotton seeds and solvent extraction from cotton seeds oil cake and ground nuts. Its manufacturing process is in three stages (I) De-linting and de-hulling of Cotton seeds, this process result in manufacture of shot fiber (linter), and De-linted cotton Seeds (II) Cotton seeds oil extraction process result in pre-refine cotton seeds oil and cotton seeds oil cake and (III) Solvent extraction process, result in pre-refine wash oil and de-oil cotton seeds cake. Cotton linter can be use in manufacturing of papers and as raw materials for manufacture of cellulose, this can be further process for medical and cosmetic purpose, linter can be broadly classified as an industrial raw materials. Cotton seeds oil cake, cotton seeds de oil cake and cotton hull are used as animal feeds. Cotton seed pre-refine oil further process by refinery to convert in to edible oil.

To part finance its working capital and general corpus fund needs, SRPL is coming out with a maiden IPO of 6420000 equity shares of Rs. 10 each via book building route with a price band of Rs. 27-31 to mobilize Rs. 17.33 cr. – Rs. 19.90 cr. (based on lower and upper price bands). Issue opens for subscription on 23.01.18 and will close on 25.01.18. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. It raised entire equity till date at par. Post issue, its current paid up capital of Rs. 15 crore will stand enhanced to Rs. 21.42 crore. Average cost of acquisitions of shares by the promoters is Rs. 9.24 and Rs. 9.81.

On performance front, SRPL has posted turnover/net profits of Rs. 157.54 cr. / Rs. 1.29 cr. (FY14), Rs. 174.67 cr. / Rs. 1.36 cr. (FY15), Rs. 183.58 cr. / Rs. 0.51 cr. (FY16) and Rs. 157.80 cr. / Rs. 0.67 cr. Thus it has shown inconsistency in bottom lines for all these years and setback for FY17 in top line. Oil extraction segment is considered as low margin/high volume business. For first half of current fiscal, it has reported net profit of Rs. 0.39 cr. on a turnover of Rs. 48.72 cr. For last three fiscals it has posted an average EPS of Rs. 0.71 and an average RoNW of 5.01% on an equity base of Rs. 15 crore. If we annualize latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 75 to 86 based on lower and upper price bands. Asking price is at a P/BV of 2.04 to 2.34 based on lower and upper price bands (on its NAV of Rs.13.21 as on 30.09.17). As per offer documents, company has no listed peers to compare with. On prima facie issue is exorbitantly priced one.

On merchant banker’s front, this is the 56th mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened around par and the rest with premiums ranging from 1% to 130% on the day of listing. 130% rewards are from the only main board IPO of this merchant banker i.e. Astron Paper.

Conclusion: Considering exorbitantly priced offer, there is no harm in giving this issue a miss. (AVOID).


Conclusion / Investment Strategy

Considering exorbitantly priced offer, there is no harm in giving this issue a miss. (AVOID).

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jan 17, 2018

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

Shree Ram Protiens IPO FAQs

  1. 1. Why Shree Ram Protiens IPO?

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

  2. 2. How is Shree Ram Protiens IPO?

    Read the Shree Ram Protiens IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Shree Ram Protiens IPO what should investors do?

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

  4. 4. Is Shree Ram Protiens IPO good?

    Our recommendation for Shree Ram Protiens IPO is to avoid.

  5. 5. Is Shree Ram Protiens IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Shree Ram Protiens IPO.

  6. 6. When will Shree Ram Protiens IPO allotment status?

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

  7. 7. When will Shree Ram Protiens IPO list?

    The Shree Ram Protiens IPO will list on Monday, February 5, 2018, at NSE SME.








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