Vaksons Automobiles IPO Review (Avoid)

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Review By Dilip Davda on Sep 22, 2015

Vaksons Automobiles Ltd (VAL) is an authorised dealer of Light Commercial Vehicles (LCV), Multi-Utility Vehicles (MUV), Small Commercial Vehicles (SCV Vehicles) and spare parts for Force Motors Ltd. It currently operates three different showrooms of Force Motors Ltd., namely at Sonepat, Panipat and Gohana within the state of Haryana. VAL also operates an in-house service centre / workshop at Sonepat for the servicing and other after-sales needs of our clients.  The company now mulls multi brand service centre and plans to have trading in auto parts, HDPE/LDPE polymer, aluminium scrap etc through its subsidiary.

For setting up Vehicle Service Centre at Sonepat, invest in its subsidiary Vaksons Metaplast and to meet its working capital needs, the company is coming out with a maiden IPO of 2400000 equity share of Rs. 10 each at a fixed price of Rs. 26 per share to mobilize Rs. 6.24 crore. Issue opens for subscription on 28.09.15 and will close on 01.10.15. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter.  Post issue its current paid up equity capital of Rs. 4.18 crore will stand enhanced to Rs. 6.58 crore. Its entire paid up equity till date has been issued at par. Lead managers to the issue are BCB Brokerages Pvt Ltd and Aryaman Financial Sercives Ltd. Cameo Corporate Services Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE SME.

On performance front, for last three fiscals the company has posted an average EPS of Rs. 2.65 with inconsistency records. Its turnover and net profits for last three fiscals were Rs. 12.05 cr. /Rs. 0.03 cr. (FY13), Rs. 14.21 cr. / Rs. 0.11 cr. (FY14) and Rs. 16.25 cr. / Rs. 0.18 cr. (FY15). For FY as its equity has jumped many folds, its EPS stands at Rs. 0.43 and it we attribute said earnings on fully diluted equity of Rs. 6.58 crore then EPS will be around Rs. 0.27 and thus asking price is at a 96 plus making it an aggressively priced IPO. It has not mentioned of its listed peers in prospectus, but has informed about composite P/E at 65 for the industry.

On merchant banker’s front, they have poor track records for their past mandates.

Conclusion / Investment Strategy

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 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

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