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.
The issue bombed, inspite reduction in price band and extended time.
Today the stock closed at Rs 134, down 6%.