Tuesday, April 23, 2019

IPO ANALYSIS : Neogen Chemicals Limited - 'No speciality in the offer' - Avoid

Image result for neogen chemicals


Issue Details :



Issue opens /
closes on


24-04 /26-04-2019
Issue size
Equity Shares comprising of
fresh issue of up to Rs. 700
Million and
OFS of up to 29,00,000
Equity shares.
Face value
Rs 10
Price Band
Rs 212-215
Business
Manufacturers of bromine-
based
and lithium-based,
specialty chemicals.
Promoters
HARIDAS THAKARSHI
KANANI AND
HARIN HARIDAS KANANI
Listing
Bse, Nse
BRLM
Inga Advisors and
Batlivala & Karani Securities
India Private Limited
Registrar
Link Intime


Business :


Company is in to manufacture of specialty organic bromine-based   and other specialty organic chemical compounds and specialty inorganic lithium-based chemicals compounds.
Specialty organic chemical compounds find use in application industries such as pharmaceutical, agrochemical, flavor and fragrance and electronic-chemical.


Lithium Compounds manufactured are used in eco-friendly Vapor Absorption Machines  for cooling air/water/process equipment and find application in industries such as heating ventilation and air-conditioning and refrigeration, construction chemicals, pharmaceutical and specialty polymer.


The company markets their Products in India and as well export  to Europe, USA and Japan.


Objects of the Fresh Issue:


1. Prepayment or repayment of loans.
2. Early redemption of debentures.
3. Long term working capital.
4. General corporate purposes.


Financials : (Rs in crores except EPS)



31-12-2018
(9 months)
31-03-2018
31-03-2017
Revenues
160
165
122
Net profit
12.22
10.49
7.68
Capital
20.10
20
20
Other Equity
41
30
22
EPS
6.09
5.25
3.84


 Risks:
  1. Suit filed by Neogen Corp against the company for using the mark ‘Neogen’.
  2. Promoter and member of promoter group are selling Shares in the Offer.
  3. Debt heavy enterprise.
  4. Company has in the past made erroneous filings with the Registrar of Companies.


Recommendations:


The offer is made around 30 PE on its FY 19 financials, which is is on the higher side. The company is un professionally managed.


Avoid the IPO.







2 comments:

  1. "The company is un-professionally managed."

    Can you name a few reasons why you use such strong words ?

    ReplyDelete