Subh Tex India Limited IPO Review (Avoid)

Review By Dilip Davda on Oct 1, 2013

Subh Tex (India) Ltd is an ISO 9001:2008 certified organization which manufactures suitings and shirtings. The company also exports finished suitings to various countries in the Middle East region and trades in various materials (semi-finished and finished products) in the textile market. STIL set up a yarn-dying unit at Vapi, Gujarat. However, due to intense competition and viability issues, the said unit was shut down in the year 1998. In the meantime, during the year 1997, it started Fabric Weaving unit (Unit I) at 277/1/2, Demni Road, Dadra, Dadra & Nagar Haveli (Union Territory) with 36 Sulzer-make powerlooms. Unit I had a capacity to manufacture 1.08 lac meters of textile material per month.

In the year 2002 Company started operations in its second unit for Fabric Weaving (Unit II) at Plot No. 18, Village Dadra, Dadra & Nagar Haveli (Union Territory) by installing 40 Sulzer-make power looms. In July 2012 STIL shifted its entire machinery of Unit I to Unit II. Currently it has a single unit for the manufacturing of grey fabric with an installed capacity of 2.29 Lacs mtrs/month.  Currently, the company is engaged in the business of manufacturing fabric viz suiting & shirting for the domestic and international market. At the same time it is involved in trading of various textile products which are of high quality and also bulk trading. These textile goods are in demand and give us an income over and above the manufacturing activity.

To finance its working capital requirements, the company is offering 3500000 equity shares of Rs. 10 each at par. The issue opens on 30.09.13 and will close on 07.10.13. Minimum application is to be made for 10000 shares and in multiples thereof, thereafter. Post issue shares will be listed on BSE SME. Issue is solely lead managed by unknown merchant banker from Hyderabad i.e. Basan Financial Services Ltd. And the registrar to the issue is Sharepro Services India Pvt. Ltd. Post issue shares will be listed on BSE SME.

Although issue is opening on 30.09.13, we do not find final prospectus on any web i.e. BSE, SEBI, Basan or even company's own web while writing this analysis on Saturday morning and thus the analysis is based on draft prospectus which contains older financial numbers.  In 2004, the company issued bonus shares in the ratio of 2 shares for every 1 share held.  For last three fiscals (2010-2012) it posted average EPS of Rs. 0.49. For first ten months ended 31.1.13 it marked net profit of Rs. 0.18 crore on a turnover of Rs. 45.13 crore, this translates in an annualized EPS of  Rs. 0.03 on present equity of Rs. 7.50 crore which will rise to Rs. 11 crore post issue. Thus the asking price on fully diluted equity is at a P/E of 500 and thus even at par offer with entry barrier is not worth.

As this is being the first IPO from Basan Financial from Hyderabad we have no track records.


Conclusion / Investment Strategy

Stay Away. The asking price on fully diluted equity is at a P/E of 500 and thus even at par offer with entry barrier is not worth. As this is being the first IPO from Basan Financial from Hyderabad we have no track records.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Oct 1, 2013

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

Subh Tex India IPO FAQs

  1. 1. Why Subh Tex India IPO?

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

  2. 2. How is Subh Tex India IPO?

    Read the Subh Tex India IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Subh Tex India IPO what should investors do?

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

  4. 4. Is Subh Tex India IPO good?

    Our recommendation for Subh Tex India IPO is to avoid.

  5. 5. Is Subh Tex India IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Subh Tex India IPO.

  6. 6. When will Subh Tex India IPO allotment status?

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

  7. 7. When will Subh Tex India IPO list?

    The Subh Tex India IPO will list on Tuesday, October 22, 2013, at BSE SME.








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