Price band: Rs 125 – Rs 150
Issue size: Rs 66.55 – Rs 79.68 crore
Issue opens: November 19, 2007
Issue size: November 21, 2007
Business:
Mumbai based manufacturer and exporter of studded gold, platinum and silver jewellery. It has three manufacturing facilities, two in Mumbai-SEEPZ and one export oriented unit. 95% sales are from USA. The company has working facility in USD and it also procures raw materials in USD and hence a natural hedge on depreciating USD.
Financials:
Top 5 customers bring in 95% revenues in USA.
Sales
FY2006-2007 – Rs 388.33 crore
PAT
FY2006-2007 – Rs 20.42 crore
Three months ago the company lost the preferential status in USA leading to erosion in margins. The tax brakes will go away in next financial year. After words it will be game to be watched at with more care.
Objective:
Expansion of existing facilities, working capital requirements and investment in foreign marketing subsidiary.
Valuation:
The stock on offer is at 13 to 16 times trailing 12 months’ earnings. Taking into account the high RONW compared to other players the stock is fairly priced. However going forward the rules of the game will change and things look uncertain.
When in doubt remain out.
Subscribe if and only if you have high risk appetite for listing gains, as the issue is said to be already sold.
Disclosure: We are not bidding in this IPO.
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