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Review By Dilip Davda on September 22, 2018
• The company is in silver ornament segment
• More revenue from trading activities
• Has just two years track record
• Issue appears fully priced.
ABOUT COMPANY:
Silgo Retail Ltd. (SRL) is engaged in the business of designing, manufacturing, retailing and wholesaling of silver jewellery. It deals in silver jewellery and offers a wide variety of designs to suit the preferences of the end customers. With regional diversity of tastes and preferences, SRL has diverse portfolio of ornaments and jewellery to suit the taste and preferences of one & all and accordingly the company developed an ability to design jewellery products as per latest trends, fashion and demographic preference of the end customers. Company’s manufacturing contributes 29% of the revenue while the rest comes from trading/retailing activities.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, SRL is coming out with a maiden IPO of 1356000 equity shares of Rs. 10 each at a fixed price of Rs. 36 per share. Company mulls mobilizing Rs. 4.88 cr. through this float. Issue opens for subscription on 27.09.18 and will close on 03.10.18. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 26.77% of the post issue paid up capital of the Company.
Aryaman Financial Services Ltd. is the lead manager while Bigshare Services Pvt. Ltd. is the registrar to the issue. The company has raised equity at par and has also issued bonus shares in the ratio of 110 for 1 share held in May 2018.Average cost of acquisition of shares by the promoters is Rs. 7.03 per share. Post issue, SRL’s current paid up equity capital of Rs. 3.71 cr. will stand enhanced to Rs. 5.07 cr.
FINANCIAL PERFORMANCE:
On performance front, for last two fiscals, SRL has posted turnover/net profits of Rs. 4.98 cr. / Rs. 0.18 cr. (FY17) and Rs. 16.47 cr. / Rs. 0.95 cr. (FY19). The company has posted an average EPS of Rs. 3.08 and an average RoNW of 87.48% for last two fiscals. Issue is priced at a P/BV of 3.57 on the basis of post bonus adjusted NAV of Rs. 10.07 and at a P/BV of 2.12 on the basis of post issue NAV of Rs.17.01. If we consider FY18 earnings and attribute it on fully diluted equity then asking price is at a P/E of around 19 plus against industry average of 29, making it fully priced issue.
COMPARE WITH LISTED PEERS:
According to offer documents, it has no listed peers to compare with.
MERCHANT BANKER’S TRACK RECORD:
On merchant banker’s front, this is the 39th mandate from its stable in last four fiscal years. Out of last 10 listings, 1 opened at discount, 3 around par and the rest with premium ranging from 1 to 6% on the day of listing. Thus it has poor track record.
Issue is fully priced. The company has just two year’s track record. Cash surplus risk savvy investors may consider investment at their own risk.
Review By Dilip Davda on September 22, 2018
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 Silgo Retail Limited offers an early investment opportunity in Silgo Retail Limited. A stock market investor can buy Silgo Retail IPO shares by applying in IPO before Silgo Retail Limited shares get listed at the stock exchanges. An investor could invest in Silgo Retail IPO for short term listing gain or a long term.
Read the Silgo Retail IPO recommendations by the leading analyst and leading stock brokers.
Silgo Retail IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Silgo Retail IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Silgo Retail IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Silgo Retail IPO.
The Silgo Retail IPO allotment status will be available on or around October 8, 2018. The allotted shares will be credited in demat account by October 10, 2018. Visit Silgo Retail IPO allotment status to check.
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