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Review By Dilip Davda on August 26, 2015
H K Trade International Ltd (HKTIL) is into the business of manufacturing and supplying of adhesive tapes and synthetic paper (teslin papers) from jumbo rolls of adhesive tapes and synthetic paper (teslin) respectively. It operates as an important intermediary in the packing material supply chain, whereby the company purchases materials such as tapes, labels, papers, etc., in the roll form which is further cut and repacked into smaller rolls.
To part finance its long term working capital needs and general corporate expenses, the company is coming out with a maiden IPO of 1272000 equity shares of Rs. 10 each at a fixed price of Rs. 18 per share (including Rs. 8 premium per share) to mobilize Rs. 2.29 crore. Issue opens for subscription on 31.08.15 and will close on 03.09.15. Minimum application is to be made for 8000 shares and in multiples thereon, thereafter. Issue is lead managed by Intensive Fiscal Services Pvt Ltd and Sharex Dynamic (India) Pvt Ltd is the registrar to the issue. Shares will be listed on BSE SME after allotments. In December 2013, it issued 200000 shares at a price of Rs. 18 per share. Post IPO its current equity capital of Rs. 1.36 crore will stand enhanced to Rs. 2.63 crore.
On performance front, the company has posted an average EPS of Rs. 0.74 (on diluted basis). For the FY15 it has posted net profit of Rs. 0.12 crore on a turnover of Rs. 4.23 crore. If we attribute this earnings on post IPO equity then asking price is at a P/E of 39 plus making it a costly bet. As per prospectus of the company, it has no listed peer to compare with. Based on general market parameters, issue is highly priced.
Lead manager has average track records for its past mandates.
Considering the entry barriers and the costly bet, there is no harm giving this issue a miss. However, well informed risks aver investors may park their funds for medium to long term rewards, that may emerge going forward.
Review By Dilip Davda on August 26, 2015
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of H.K. Trade International Limited offers an early investment opportunity in H.K. Trade International Limited. A stock market investor can buy H K Trade IPO shares by applying in IPO before H.K. Trade International Limited shares get listed at the stock exchanges. An investor could invest in H K Trade IPO for short term listing gain or a long term.
Read the H K Trade IPO recommendations by the leading analyst and leading stock brokers.
H K Trade IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the H K Trade IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for H K Trade IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the H K Trade IPO.
The H K Trade IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit H K Trade IPO allotment status to check.
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