ISSUE
OPENS /CLOSES ON
|
25-04
/29-04-2013
|
ISSUE
SIZE
|
1,05,06,954
EQUITY SHARES
|
PROMOTERS
|
NASEER
AHMED
|
PRICE
BAND / FV
|
RS
130-132 /RS 10
|
|
|
BRLM
|
KEY
NOTE, CANARA BANK
|
REGISTRAR
|
LINK
INTIME
|
LISTING
|
BSE
/NSE
|
BUSINESS
The company is in to manufacture of hi-fashion Ready Made
garments for export markets.
Objects of the IPO
The IPO funds are intended to be used for setting up a
trouser plant at Doddaballapur and knitting fabric processing unit at Kolhapur,
augmenting margins towards incremental working capital requirements and for general
corporate expenses.
FINANCIALS (RUPEES
IN CRORES)
|
31-03-11
|
31-03-12
|
31-10-2012
( FOR
7 MONTHS)
|
TOTAL
INCOME
|
504
|
566
|
335
|
PAT
|
35
|
84**
|
20
|
EQUITY
|
26.74
|
26.74
|
26.74
|
EPS
|
13.06
|
31.43
|
13.00
|
**Includes profit on sale of investments amounting to Rs
59cr, which is non-recurring in nature.
MATTERS OF CONCERN
1. The
company is yet to obtain statutory licenses and approval for setting of new
units.
2. Exports
constitute 90% of total sales, that too from European union.
3. Major
sales from top 10 customers.
4. Orders
for plant and machineries are not placed and incremental working capital not
tied up.
5. Scotts
– trade mark not yet registered.
6. The
company faces competition from established players; slowdown in Euro zone will
affect the profitability.
7. Average
cost of acquisition of shares by promoters is just Rs 1.46 paise, per share.
VALUATION AND RECOMMENDATIONS.
The IPO is being lead managed by Keynote Capital who is
known to introduce poor quality and fraud issues to the market. The last issue
managed by them was Servalaxmi Papers. As against the IPO price of Rs 29, the shares
are now trading around Rs 3.
Scotts will have a capital of Rs 39Cr, post IPO. Basing
on the published figures up to October 2012, the company may report an after
tax profit of Rs 30Cr, which gives an EPS around Rs 8 for FY 13. The profit
reported for FY 12 is not to be taken seriously for two reasons. One, IPO was
planned for June 2012, due to various reasons it did not materialize. Profit numbers
for that year is appears to be manufactured. Secondly, keeping IPO in mind, the
company booked one time profit on sale of investments amounting to Rs 59Cr. If
one removes that figure profit from operations will be around Rs 20Cr, which
gives an EPS of Rs 7.
At Rs 130-132, the IPO is irrationally priced. Avoid the
IPO.
(Keynote is known to prop up share price on listing day.)