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Vishal Fabrics Ltd IPO Review (Avoid)

Review By Dilip Davda on Jul 25, 2014

 

Vishal Fabrics Ltd: Vishal Fabrics Limited (VFL) is a flagship Company of Chiripal Group, Ahmedabad and is recognized as a leading process house with a capacity to produce 100 million meter processed fabric per annum. The Company is engaged in the business of dyeing, printing and processing of fabrics of its own and also on job work basis. The Company procures mainly Grey Fabric and dyes, prints and finishes the same as per the client’s requirements. The processing unit of the Company is based in Narol, Ahmedabad, Gujarat. The plant has the capacity to print, dye and process wide range of fabrics i.e. cotton, polyester, viscose and man-made & blended fabrics suitable for men’s wear, women’s wear, home furnishing and many other applications.

 

 

 

To meet its long term funding requirement the company is coming out with a maiden IPO of 3474000 equity share of Rs. 10 each at a fixed price of Rs. 45 per share to mobilize Rs. 15.63 crore. The issue opens for subscription on 31.07.14 and will close on 05.08.2014. Minimum application is to be made for 3000 shares and in multiples thereof, thereafter. Issue is lead managed by Aryaman Financial Services Ltd and Link Intime India Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE SME.

 

 

 

On performance front, VFL has posted an average EPS of Rs. 1.92 for last three fiscals ended 31.3.13. For first nine months ended 31.12.13 it has earned net profit of Rs. 2.12 crore on a turnover of Rs. 136.59 crore. If we attribute this earnings on expanded equity of Rs. 13.17 crore, then the asking price is at a P/E of around 21 against peers quoting below 5 P/E. Company’s equity shares was having face value of Rs. 100 till January 2014 and it made preferential issue of 2100 shares at a price of Rs. 300 per share in September 1998, 40000 shares at a price of Rs. 700 in May 2003, 10000 shares at a price of Rs. 2000 per share in March 2005, 5000 shares at a price of Rs. 2100 in November 2007 and then issued two bonus in the ratio of 3 for 1 in January 2014 and 1 for 1 in March 2014. In March 2014 it issued 500000 shares at a price of Rs. 45 to promoters to pave the way for pricing of this IPO, which is very aggressive.

 

 

 

Lead manager has poor track record.


Conclusion / Investment Strategy

 

Remark: Avoid this pricy issue that also has entry barriers.  

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jul 25, 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 prior to making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

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

The Vishal Fabrics IPO Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered IPO Analysts tells you if Vishal Fabrics IPO worth investing. The Vishal Fabrics IPO Note sets the IPO expectations in systematic way which tells you if Vishal Fabrics IPO good to buy (good or bad / yes or no). The IPO Forecast tells you weather to invest in Vishal Fabrics IPO by providing IPO recommendations i.e. subscribe, avoid and neutral.


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