Ultracab India Ltd IPO Review (Avoid)

Review By Dilip Davda on Sep 11, 2014

Ultracab India is engaged in the manufacturing and selling in domestic market as well as exporting of wires and cables. Currently it exports its products to countries like UK, UAE, Africa, Singapore, Uganda etc. It also offers customized products as per requirement of user industry. It manufactures various ranges of cables and wires.

Now to part finance its working capital requirements, the company is coming out with an equity issue of 2214000 equity shares of Rs. 10 each at a fixed price of Rs. 36 per share to mobilize Rs. 7.97 crore. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment shares will be listed on BSE SME. Issue is lead managed by Pantomath Capital Advisors Pvt Ltd and Bigshare Services Pvt Ltd is the registrar to the issue. Issue opens for subscription on 15.09.14 and will close on 23.09.14. Its current equity is Rs. 5.80 crore that will rise to Rs. 8.01 crore post issue. Company raised equity with preferential issue during March 2011 to July 2014 at a price ranging between Rs. 20 to Rs. 36 and issued bonus shares in August 2014 in the ratio of 1 share for every 1 share held.

On performance front, the company has posted rising pattern of turnover and profits for past five years. Its turnover rose from Rs. 10.66 crore in 2009-10 to Rs. 28.84 crore in 2012-13 and net profit marked rising trends from 2009-10 to 2011-12  from Rs. 0.15 crore to Rs. 0.28 crore and was down to Rs. 0.22 crore for 2012-13. However, for the fiscal 2013-14 it has earned net profit of Rs. 0.83 crore on a turnover of Rs. 31.81 crore marking huge jump in bottom line. If we attribute these earnings on enhanced equity post issue then the asking price is at a P/E of 34 which is very high. Its peers are trading at a P/E around or below 20.


Conclusion / Investment Strategy

SME investment is having entry barrier at entry and trading levels and many broking houses discourage marketing, recommendation and trading or deals on SME counters. Thus SME investment carries these additional blockades.

On merchant banker’s front, in past two mandates they have given marginal listing gains and currently quoting at better yields. Considering these, risks aver investors having surplus funds can park their money for medium to long term rewards. Others can just avoid it.

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

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 11, 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

Ultracab IPO FAQs

  1. 1. Why Ultracab IPO?

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

  2. 2. How is Ultracab IPO?

    Read the Ultracab IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Ultracab IPO what should investors do?

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

  4. 4. Is Ultracab IPO good?

    Our recommendation for Ultracab IPO is to avoid.

  5. 5. Is Ultracab IPO worth Investing?

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

  6. 6. When will Ultracab IPO allotment status?

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

  7. 7. When will Ultracab IPO list?

    The Ultracab IPO will list on Friday, October 10, 2014, at BSE SME.








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