FREE Equity Delivery and MF
Flat ₹20/trade Intra-day/F&O
|
Review By MLR Securities Private Ltd on August 25, 2011
Issue Period: 23rd Aug - 26th Aug
Price Range: INR 58-65
Issue Size: INR 203-227.5 Cr
Mcap: INR 808-905Cr
IPO Grading: ICRA IPO Grade 3
BRLM: Karvy, IDBI Cap, SPA
Promoter: Dr Anil Jindal , Sunil Jindal
Listing: BSE & NSE
SRS Limited is a diversified company with a business portfolio comprising of Cinema Exhibition, Retail, Food & Beverages and Manufacturing & Retailing of Jewellery.
SRS Cinemas is the cinema exhibition brand under which the company operates 11 properties across 6 cities having 30 screens and 7,608 seats. In the food & beverages segment, the company operates 11 food courts under the SRS 7dayz brand, 3 fine dining restaurants under the brand 'Punjabi Haandi' located at Faridabad, Gorakhpur and Ludhiana. The company offers catering services through its brand SRS Banquets, located at Faridabad. The SRS 7dayz brand also sells packaged snack foods through the company's own retail stores as well as through other retailers.
The company operates a chain of retail stores under the brand name of SRS Value Bazaar that offer various FMCG products, crockery, appliances, accessories, etc. SRS Fashion Wear is the other brand under which the Company retails multi‐brand apparels. The Company has 23 retail stores in North India with a total floor space of more than 0.132 mn. sq. ft. The company sells gold and diamond jewellery under the brand name of SRS Jewells, which is procured from its 100% subsidiary having manufacturing facility at Patparganj, New Delhi and through third parties. The Company at present has 3 retail showrooms at Delhi, Faridabad and Palwal and 2 wholesale outlets at Chandni Chowk and Karol Bagh, Delhi. Recently, the company has also started the manufacturing facilty at Noida SEZ.
Dr Anil Jindal, Sunil Jindal, Bishan Bansal and Raju Bansal are the promoters of the company. Dr Anil Jindal is the chairman of the company and has experience of more than 25 years in areas of finance & leasing, entertainment, cinemas, food & beverages, retail and real estate. Sunil Jindal is the managing director of the company. He is the founder promoter of the company and has an experience of more than 11 years in management of Mall, Multiplexes, Retail Chain and Corporate Planning.
The company's market cap is Rs 905 Cr on an upper price band of Rs 65. SRS is asking for post issue valuations of 21-24 times FY11 EPS of Rs 2.67. Looking at price to book value ratio the stock is priced at 1.7 times its FY11 book value of 38 post issue on an upper price band of Rs 65.
Almost 90% of IPO proceeds are proposed to be utilised in three businesses, Cinemas, F&B and retail, which accounted for around ~20% of the company's EBITDA in FY10 and FY11. While the company has identified the cities, it is yet to identify the proposed locations for the outlets to be set up from IPO proceeds, ability to timely identify them and commence satisfactory operations will be critical to maintain future profitability. Overall weak profit margins due to lower value addition in retail business and jewellery business, which accounted for almost 95% of company's revenues in FY11.
Considering company's weak fundamentals and expensive valuations compared to other players in the jewellery and retail segments we recommend investors
to avoid this issue.
Review By MLR Securities Private Ltd on August 25, 2011
FREE Intraday Trading (Eq, F&O)
Flat ₹20 Per Trade in F&O
|