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Sirohia & Sons Ltd IPO Review (Avoid)

Review By Dilip Davda on Sep 7, 2014

Sirohia & Sons is engaged in the business of dealing in fertilizers and pesticides catering primarily to Tea Industry located in the North East region of the Country, particularly the state of Assam and West Bengal. It receives orders of the specific fertilizers and pesticides required by the Tea Estates through its direct marketing and procure them from the manufacturers which are mostly multinational companies like BASF India Limited, Bayer Cropscience India Limited, Biostadt India Limited, DIC India Limited etc,. 

Some of the products which the company is dealing include DELTAMETHREINE, CYPERMETHRIN, BACILLUS, THIACLOPRID and METHOMYL.

To meet its long term working capital requirements, the company is offering 3000000 equity shares of Rs. 10 each at a fixed price of Rs. 12 per share to mobilize Rs. 3.60 crore. From 2003 to 2008 company made preferential equity issue at a price of Rs. 50 per share and between 2011-13 it was done at a price of Rs. 30 per share. This has helped company to show NAV of Rs. 30 per share. Post IPO its equity will rise to Rs. 10.26 crore. Issue opens for subscription on 08.09.14 and will close on 10.09.14. It will be listed on BSE SME. Minimum application is to be made for 10000 shares and in multiples thereof, thereafter. Issue is lead managed by VC Corporate Advisors Pvt Ltd. and registrar to the issue is Adroit Corporate Services Pvt. Ltd.  

Company has inconsistency in performance track records. In fact for past five fiscals, its top and bottom line has wide mismatch. For fiscals 2009-10 to 2011-12 its top line remained around Rs. 23 crore and net profit was in the region of Rs. 0.05 crore. For 2012-13 it earned net profit of Rs. 0.08 crore on a turnover of Rs. 16.89 crore and for 2013-14 it has posted net profit of Rs. 0.14 crore on a turnover of Rs. 11.50 crore. Thus while turnover is showing declining pattern, profit is showing rising pattern, which is really surprising. Last three fiscals average EPs is Rs. 0.37. Based on 2013-14 workings the asking price on fully diluted equity stands at 136 P/E which is making this issue a pricy bet. 

On merchant banker’s front, this is second mandate of SME IPO and first one has give rewards to investors with erratic movements of prices for past two years.


Conclusion / Investment Strategy

Avoid

(Disclaimer: Author has no plans to invest in this IPO)

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 7, 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

Sirohia & Sons IPO FAQs

  1. 1. Why Sirohia & Sons IPO?

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

  2. 2. How is Sirohia & Sons IPO?

    Read the Sirohia & Sons IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Sirohia & Sons IPO what should investors do?

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

  4. 4. Is Sirohia & Sons IPO good?

    Our recommendation for Sirohia & Sons IPO is to avoid.

  5. 5. Is Sirohia & Sons IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Sirohia & Sons IPO.

  6. 6. When will Sirohia & Sons IPO allotment status?

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

  7. 7. When will Sirohia & Sons IPO list?

    The Sirohia & Sons IPO will list on Wednesday, September 24, 2014, at BSE SME.