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Universal Autofoundry SME lPO review (Apply)

Review By Dilip Davda on Aug 18, 2015

Universal Autofoundry Ltd (UAL) is engaged in the manufacturing of Iron Castings. It manufactures castings components in Grey Iron and S.G. (Ductile) Iron, primarily for automotive sector. Castings are supplied in Machined, Semi Machined and as cast condition with surface treatment as per customer’s need. Suspension Brackets, Differential housing, Hubs, Brake drum, Flywheels, Adjuster Nuts, Pulleys, Dampers, etc. are some of the items that find application in the commercial vehicle and engineering industry.

UAL has more than 65,000 sq. ft. size area manufacturing plant located at VKI Area, Jaipur, Rajasthan, which has an existing installed capacity of 7,800 MT p.a. for the manufacture of grey iron and ductile iron castings. It caters to the requirements of many of the major automotive and engineering goods manufacturers in India namely Ashok Leyland Limited, V E Commercial Vehicles Limited, Escorts Limited, TAFE, JCB India Ltd. etc.

To part finance its expansion of manufacturing facilities and meeting general corpus funds requirements, the company is coming out with a maiden IPO of 2160000 equity share of Rs. 10 each at a fixed price of Rs. 15 per share (including Rs. 5 premium per share) to mobilize Rs. 3.24 crore. The issue opens for subscription on 19.08.15 and will close on 21.08.15. Minimum application is to be made for 8000 shares and in multiples thereon, thereafter. After MoA equity on inception till 2012, it issued shares at par and then on 03.07.15 it issued bonus shares in the ratio of 5 shares for every 2 shares held that brought its paid up equity to Rs. 5.95 crore that will rise to Rs. 8.11 crore post IPO. Sole lead manager of this IPO is Hem Securities Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE SME.

On performance front, it has posted an average EPS of Rs. 2.74 for last three fiscals (based on pre-bonus equity of Rs. 1.70 crore). For the year ended 31.03.15 it has earned net profit of Rs. 1.91 crore on a turnover of Rs. 57.23 crore. If we attribute these earnings on fully diluted equity of Rs. 8.11 crore post IPO, then asking price is at a P/E of around 6 against industry composite of 28 P/E that augurs well.

This is the 14th IPO from the lead manager and it has mixed trends for its past 13 offers post listing.


Conclusion / Investment Strategy

Long term investors may consider moderate investments.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Aug 18, 2015

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

Universal Autofoundry IPO FAQs

  1. 1. Why Universal Autofoundry IPO?

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

  2. 2. How is Universal Autofoundry IPO?

    Read the Universal Autofoundry IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Universal Autofoundry IPO what should investors do?

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

  4. 4. Is Universal Autofoundry IPO good?

    Our recommendation for Universal Autofoundry IPO is to subscribe.

  5. 5. Is Universal Autofoundry IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Universal Autofoundry IPO.

  6. 6. When will Universal Autofoundry IPO allotment status?

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

  7. 7. When will Universal Autofoundry IPO list?

    The Universal Autofoundry IPO will list on Friday, September 4, 2015, at BSE SME.