Nelcast Limited IPO Message Board (Page 5)

Roman Tarmat or Nelcast Pls help me to selection out of these two IPO.

Thanks

Hemant, U r doing a good job keep it up.

dont buy nelcast.its not great stock to be in.
i dont see any demand and also auto ancillary business has hardly given anything to investors on listing.beetr avoid.
meghmani is an average issue although the business model in agro does not command high p/e .my personal advice is go for meghmani in small quantites and dlf and skip nelcast.
teach nelcast promoters lesson as they have not left much for investors

SOURCE :- Economic Times

Nelcast, a South-based castings major, is coming out with an IPO of 43.5 lakh equity shares of Rs 10 each. This represents 25% of the post-issue paid-up equity capital of the company. The issue is being made through the book-building route. Its prime objective is to fund the company’s capex programme and raise incremental working capital.

Business:

With an installed capacity of 1.02 lakh tonnes p.a. the company claims to be India’s largest manufacturer of Spheroidal Graphite (SG) iron castings, also known as ductile cast iron. Its capacity is spread over two units in Andhra Pradesh and the company primarily serves commercial vehicle and tractor makers.

Tata Motors is its biggest customer, followed by Ashok Leyland and M&M. Around 10% of the company’s output is exported. SG iron castings have advantages like versatility, cost efficiency and a good combination of high ductility, high tensile strength and machining properties. So, they are preferred over grey iron casting in heavy duty applications in auto, railways and earth moving equipment.

Globally, the output of SG iron castings is growing at more than twice the rate of grey iron castings. Foundries are shutting down in developed markets due to rising labour costs, shortage of skilled labour and environmental concerns. This provides Nelcast with significant growth potential in domestic and overseas markets.

In India, the demand for SG iron castings far out-strips supply. But most producers are expanding capacity and the market may cool off by the middle of next year. The company plans to expand its castings capacity to 150,000 tonnes by FY09 and increase its machining capacity to improve sales realisation. Additional capacity may increase its topline by Rs 100-120 crore in the next two years.

Financials:

During the year ended March ’07, Nelcast’s PAT tripled to Rs 19.8 crore, against Rs 7.1 crore in FY06. Net sales rose 30% to Rs 306 crore. Improvement in sales realisation and savings on power and fuel cost led to a 180 bps improvement in OPM to 10.7% of net sales during FY07.

Valuations:

At the lower end of the price band of Rs 195 per share, the stock is valued at around 17 times its FY07 EPS of Rs 11.4, based on the post-issue equity. Assuming a 30% topline growth and last year’s operating margin, the one-year forward P/E works out to 12. Though this is attractive, it does not offer much upside potential to investors. Investors can avoid the issue as they may get the stock cheaper in the secondary market.

Hi Guest,

Thank you very much for your honest comments.

Don't apply they have done pre-ipo placement at 155/share
for value worth 3.01 crores. If still u want to apply then
apply at lower price band.

Companies which are greedy don't want to give away anything to the investors like DLF, Nelcast etc. Don't invest in such companies. Apply where issue is small and aggressively priced like MIC, NFPIL etc.

How much can we expect in the listing?

Hi All,

The picture is not getting clearer whether to "Apply or Not
to Apply."

capital market ranking is 46 and not 48

Capital Market Review (CM Rating 46/100) - Nelcast : Dependent on the auto industry

Ramping up of exports and increasing machining are required to maintain growth as domestic users face a slowdown:

Nelcast, promoted by P.Radhakrishna Reddy, is a TS 16949 accredited organisation. The product range includes around 200 items in SG (Spheroidal Graphite) Iron Castings and grey iron castings. Cylinder blocks, rear hubs, spring shackle, brackets, and exhaust manifolds manufactured by the company are used in heavy commercial vehicles (HCVs) and tractors.

The cost of expansion/ modernisation of the existing production facilities from 72,000 tpa to 1,50,000 tpa is estimated at Rs 61.46 crore, while incremental working capital requirement is projected at Rs 25 crore.

Part of the expansion has already been carried out: Installed capacity has increased to 1,02,000 tpa from 72,000 tpa end of the second half of the year ending March 2007. Further expansion is on the anvil at both the existing plants to achieve a total capacity of 1,50,000 tpa FY 2009. The expansion would be undertaken in a phased manner. Capacity would be increased from 1,02,000 tpa to 1,20,000 tpa by September 2007, and from 1,20,000 tpa to 1,50,000 tpa by September 2008.

Right now, Neelcast exports about 9% of its sales Globally, export of castings to developed nations is on the rise on account of rising costs, lack of skilled foundry people and environmental restrictions in these markets. The export target is 30% of sales by 2010.

Strengths
_________

* The composition of machined castings is about 10% of production. This is to be increased to about 20%-25% over the next two years so as to improve margin.

Weaknesses
__________

* More than 70% of revenue is derived from the HCV and tractor segments. Both these user industries are set to slow down significantly in FY 2008 even as the company is implementing substantial capacity expansion.

* Ancillaries to domestic auto and auto components sectors often have to maintain their prices despite rising raw material cost due to a limited number of clients. Margin is down from 11.9% in FY 2004 to 8.9% in FY 2006, though it jumped to 13.4% in FY 2007.

Valuation
_________
At a price band of Rs 195–Rs 219, Nelcast’s P/E works out to 17.2–19.3 times FY 2007 earning on post-diluted equity. Industry peer Ennore Foundries is trading at a P/E of 19.0.

capital market magazine is giving rating -48. they will put on web-site by monday.

What is the premium in grey market?

hi ritu & amit

capital market site is not showing rating for this issue.
from where u have got it?
please inform
wish u happy investing

Costly. but c. m . rating. is 46.so one must go for it.

Capital market ranking 46........apply aggrsively

Hi friends those who want to make real money they can invest in it , if it does not make good listing than it would be a golden chance to buy it buy at your fullest and than send me 10% of your profits

hi rekhs,
i think u r a gud analyst..pls lemme kno abt MEGHMANI ORGANICS n DLF pls..

I have heard that Nelcast is a unique company and is cattering to all auto majors. Its growth forcast is also good. What are your views with listing gain prospective, whether to invest or not.

Hi chkapila,
The stop payment instruction is given to your bank from where you have issued your chq for the IPO.The instruction must be given before the collecting bank sends the cheques for collection to your bank.There is no legal problem in stop payment to a cheque for which you were under no obligation to issue the cheque.It was your own will and wish to apply and stop.If you stop payment a chq issued by you for instance to clear a liability then you will be in soup.But not here.Go ahead.

hi rekha, could you please tell me how to stop payment. Isn't there any legal problem in it?