Showing posts with label IPO RECOMMENDATIONS SRS IPO INDIA NOTE SRS IPO GRADE ICRA 3 SRS IPO PRICE BAND SRS RS 55. Show all posts
Showing posts with label IPO RECOMMENDATIONS SRS IPO INDIA NOTE SRS IPO GRADE ICRA 3 SRS IPO PRICE BAND SRS RS 55. Show all posts

Saturday, August 13, 2011

IPO ANALYSIS - SRS LIMITED.

SURE TO RUIN YOUR SAVINGS – AVOID.

IPO FROM AN ONCE SEBI DEBARRED GROUP COMPANY.

PRICE BAND - RS 58-65.

The BRLMs to the IPO are Karvy Investor Services, IDBI Capital Markets and SPA Merchant bankers.

First, IPO managed by these managers in the last twenty months.

SPA has managed two issues – Infinite Computers and Cantabill, both are trading much below heir offer price.

IDBI Capital has managed one issue – ARSS Infra - as against the IPO price of Rs 450, shares are trading at Rs 370. Karvy has not managed any issue during the period.

SRS is a diversified Company with business interests in Cinema Exhibition, Food / Beverages, Retail / Manufacturing & Retail Jewellery.

FIANCIALS:

RS IN CRORES.


31-03-10

31-03-11

SALES

1329

2077

PAT

26

37

EPS (Rs)

2.55

3.60

MATTERS OF CONCERN:

1. One of the Promoter Group Companies, namely SRS Real Infrastructure (earlier known as Manu Finlease Limited) came with an IPO in the year 1995. After the public issue, Securities and Exchange Board of India (SEBI), on the grounds of alleged malpractices in the public issue ordered

Investigations to be conducted to ascertain the truth of allegations.

The Chairman of SEBI passed an order dated November 29, 2002, whereby M/s. Manu Finlease Limited, Anil Kumar Jindal, J.K. Garg, P.K. Kapoor and Mrs. Ritu Garg were debarred from accessing and being associated with the capital market for a period of 5 years.

2.SEBI had withdrawn the acknowledgment card issued to one of the group company’s IPO in 1996, for non disclosing the irregularities in the IPO of Manu Finelease, a group company.

3. Lacks corporate governance.

4. Almost 90% of IPO proceeds are proposed to be utilized in three businesses, Cinemas, F&B and retail, which accounted for around ~20% of the company’s OPBDITA in FY 10 and 11, according to ICRA.

5. Low RNOW.

6. Negative cash flow in the last three years.

7. Almost a dozen PSU banks are banker to the company including SBI.

However, none of them are BRLMs.

VALUATION AND RECOMMENDATIONS:

For the year 31-03-11, the total revenue is Rs 2077cr. More than 50% of this has come from traded items. This appears to be manufactured. The negative cash flow in the last 3 years from a company which is in to predominately cash sales business, justifies the suspicion.

The company will have a post issue capital of Rs 139.29cr, even to earn an EPS of Rs 1, the company earn a PAT of Rs 14cr, which is unlikely in the near future. These kind stocks are not worth at face value.

The group companies were earlier subjected various strictures, including debarring from accessing capital markets. That has not prevented from them approaching the market in new avatar.

Public memory is short and it is shortest in Capital Markets. Even the disgraced promoters floats an IPO now, it will be heavily subscribed. And if the investors lose the money in that exercise, they can always blame the regulators.

Surprisingly the IPO carries a grade of 3 from ICRA and there is no mention of the SEBI indictment in the report.

AVOID THE IPO.

ISSUE DETAILS:

Issue opens / closes on – 23/8, 26/8

IPO grade 3 by ICRA.

Promoters:

Dr. Anil Jindal, Sunil Jindal, Bishan Bansal, Raju Bansal, BTL Industries and BTL Portfolio Limited

Issue size – 3,50,00,000 equity shares of Rs 10 FV.