IPO Analysis

Date Heading Details
11-Dec-2018   16:42 Hrs IST Shankar Lal Rampal Dye-Chem coming up with an IPO to raise Rs 7.29 crore <p align="justify"><strong></strong><p align="justify"><strong>Shankar Lal Rampal Dye-Chem</strong> <ul><li><div align="justify">Shankar Lal Rampal Dye-Chem is coming out with an initial public offering (IPO) of 1,620,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 45 per equity share.</div></li><li><div align="justify">The issue will open on December 12, 2018 and will close on December 14, 2018.</div></li><li><div align="justify">The shares will be listed on SME Platform of BSE.</div></li><li><div align="justify">The share is priced 4.5 times higher to its face value of Rs 10.</div></li><li><div align="justify">Book running lead manager to the issue is Finshore Management Services.</div></li><li><div align="justify">Compliance Officer for the issue is Aditi Babel.</div></li></ul><p align="justify"><strong>Profile of the company</strong><p align="justify">The Company was originally constituted as a Private Limited Company in the name and styles of ‘Shankar Lal Rampal&nbsp; Dye-Chem&nbsp; Private&nbsp; Limited'&nbsp; vide&nbsp; an&nbsp; Incorporation&nbsp; Certificate&nbsp; as&nbsp; on&nbsp; September&nbsp; 19,&nbsp; 2005. Subsequently, it was converted into a public limited company pursuant to special resolution passed&nbsp; at&nbsp; its&nbsp; Extra-ordinary&nbsp; General&nbsp; Meeting of the company held&nbsp; on&nbsp; April 23, 2018 and the name of&nbsp; the company was changed to ‘Shankar Lal Rampal Dye-Chem Limited' vide a fresh Certificate of Incorporation consequent upon conversion dated May 08, 2018 issued by Registrar of Companies, Jaipur.<p align="justify">Shankar Lal Rampal Dye-Chem is engaged in the business of trading chemicals and dyes. The company is a prominent Manufacturer, Exporter, Importer, and Supplier of Sodium Sulphide flakes Red and Yellow, Soduim Hydro Sulfite , Hydrogen Peroxide, Citric Acid Monohydrate / Anhydrous, Phosphate Chemicals-sodium Hexameta phosphate, Sodium tripoly phosphate, Tri sodium Phosphate, Sodium Nitrite, and Refined Glycerine in India.<p align="justify"><strong>Proceed is being used for:</strong><ul><li><div align="justify">Meeting the working capital requirements of the company;</div></li><li><div align="justify">Meeting the issue expenses.</div></li></ul><p align="justify"><strong>Industry Overview</strong><p align="justify">The Indian chemical industry is among the established traditional sectors of the country that play an integral role in the country's economic development. This sector forms a part of the basic goods industry and is a critical input for industrial and agricultural development. The chemical industry is among the most diversified industrial sectors and includes basic chemicals and its products, petrochemicals, fertilizers, paints, gases, pharmaceuticals, dyes, etc. The sector covers over 70,000 commercial products, and provides the feedstock to many downstream industries such as finished drugs, dyestuffs, paper, synthetic rubber, plastics, polyester, paints, pesticides, fertilizers and detergents. Over the years, the industry has been evolving with a shift towards product innovation, brand building and environmental friendliness.<p align="justify">In terms of value and production volume, Indian chemical industry is the 3rd largest producer in Asia &amp; 6th by output in the world. Indian chemical industry could grow at 11 percent p.a. to reach size of $224 billion by 2017 in 2016; India chemicals industry had a market size of $139 billion. By 2025, the Indian chemical industry is projected to reach $403 billion. The chemical industry in India is a key constituent of Indian economy, accounting for about 2.11% of the GDP. More than 70,000 commercial products such as petrochemicals &amp; basic chemicals are covered under chemical sector. India accounts for approximately 16% of the world production of dyestuff &amp;dye intermediates, particularly for reactive acid &amp; direct dyes. India is currently the world's 3rd largest consumer of polymers &amp; 3rd largest&nbsp;&nbsp; producer of Agro chemicals. Indian specialty chemical market is expected to reach $70 billion by 2020. Value exports of inorganic chemicals from India is estimated at $1.21 billion in FY16,with the organic chemical market reaching $11.51 billion in FY16. Exports of organic chemicals from India stood at $4.02 billion in FY16.&nbsp; <p align="justify"><strong>Pros and strengths</strong><p align="justify"><strong>Wide range of products:</strong> The Company deals in large number of products and offers an entire range of specialty chemicals used in Textiles &amp; Garments Processing namely the Pre-treatment, Printing, Dyeing and Finishing Process. It also offers specialty performance chemicals to the Leather &amp; Agrochemicals industry. It is also trading in some other products for comfort of Buyers. Those products include Food Colour, Pigment Powder, Paste Acids and Direct Dyes.&nbsp; <p align="justify"><strong>Well established relationship with clients:</strong> The Company generates most of its revenue from domestic operations; it has trusted buyers who give repeated orders at frequent intervals. The repetition of orders is basically owing to the quality of the product it provides and also the healthy relationship it maintain. Its promoter visits regularly to them to understand their needs, concerns and address them personally. It understands the dye and Chemical industry is highly competitive and maintaining healthy relationship with them will help it to be in the competition.<p align="justify"><strong>Risks and concerns&nbsp; </strong><p align="justify"><strong>Dependent on third party transportation providers:</strong> The Company uses services of third party transportation providers for supply of raw materials as well as delivery of finished products. The company relies on fleet of trucks. In the event of non availability of fleet of trucks, due to strike or any other reason may have an adverse impact on the receipt of supplies of raw material and delivery of the finished products thereby adversely affecting the operations.<p align="justify"><strong>No long-term contracts:</strong> To a major extent, the Company is dependent on external suppliers for products in which it trade and it do not have any long-term supply agreements or commitments in relation to the same. Consequently, it is exposed to price and supply fluctuations and these fluctuations may adversely affect the ability to obtain orders and/or to execute them in a timely manner, which would have a material adverse effect on business, results of operations and financial condition. In case of non-availability of materials on favorable terms, it may have to procure the same at the terms and conditions prevalent at that point. This will result in reducing the revenues by a considerable amount due to shortage of material or due to inability to procure the same.<p align="justify"><strong>Outlook</strong><p align="justify">Shankar Lal Rampal Dye-Chem is engaged in the business of trading chemicals and dyes. The company is a prominent Manufacturer, Exporter, Importer, and Supplier of Sodium Sulphide flakes Red and Yellow, Soduim Hydro Sulfite , Hydrogen Peroxide, Citric Acid Monohydrate / Anhydrous, Phosphate Chemicals-sodium Hexameta phosphate, Sodium tripoly phosphate, Tri sodium Phosphate, Sodium Nitrite, and Refined Glycerine in India. The Company believes that its strength and success factor has been its constant focus on quality and innovation. On the concern side, it requires high working capital for smooth day to day operations of business and any discontinuance or inability to acquire adequate working capital timely and on favorable terms may have an adverse effect on operations, profitability and growth prospects.&nbsp; <p align="justify">The company is coming out with a maiden IPO of 1,620,000 equity shares of Rs 10 each at a fixed price of Rs 45 per share to mobilize Rs 7.29 crore. On performance front, During the FY 2017-18 the revenue from trading activity of dye &amp; chemicals of the company has been increased to Rs 7516.44 Lacs as against Rs 2919.43 Lacs in the FY 2016-17, representing an increase of 157.46% of the total revenue. Profit after Tax for FY 2017-18 has been increased to Rs 96.47 Lacs from Rs 11.14 Lacs representing increase by 766.14% from FY 2016-2017 due to increase in volume of operations and better profit realization. The efficiency of the marketing and sales network is critical success of the Company. Its success lies in the strength of relationship with the Manufacturers and traders/resellers who have been associated with Company. It believes that the relationship with business partners is strong and established, as it receives repeated orders. To retain the customers, it team having adequate experience and competencies, regularly interact with them and focus on gaining an insight into the&nbsp; additional needs of customers.<p align="justify"><strong>(Financials in Rs Million)</strong><p align="justify"><table width="100%" border="1" cellspacing="1" cellpadding="1"><tbody><tr><th>Particulars</th><th>Mar&nbsp;2018</th><th>Mar&nbsp;2017</th><th>Mar&nbsp;2016</th><th>Mar&nbsp;2015</th><th>Mar&nbsp;2014</th></tr><tr><td>Net Sales</td><td>751.64&nbsp;</td><td>291.94&nbsp;</td><td>259.94&nbsp;</td><td>219.44&nbsp;</td><td>234.10&nbsp;</td></tr><tr><td>Total Income</td><td>751.69&nbsp;</td><td>291.94&nbsp;</td><td>259.97&nbsp;</td><td>219.45&nbsp;</td><td>234.15&nbsp;</td></tr><tr><td>PBIDT</td><td>23.73&nbsp;</td><td>4.16&nbsp;</td><td>2.45&nbsp;</td><td>2.05&nbsp;</td><td>2.45&nbsp;</td></tr><tr><td>PBT</td><td>13.50&nbsp;</td><td>1.63&nbsp;</td><td>1.44&nbsp;</td><td>0.99&nbsp;</td><td>1.08&nbsp;</td></tr><tr><td>PAT</td><td>9.65&nbsp;</td><td>1.11&nbsp;</td><td>0.99&nbsp;</td><td>0.63&nbsp;</td><td>0.74&nbsp;</td></tr><tr><td>Reserves and Surplus</td><td>165.91&nbsp;</td><td>61.88&nbsp;</td><td>60.76&nbsp;</td><td>59.77&nbsp;</td><td>44.73&nbsp;</td></tr><tr><td>Net Worth</td><td>209.69&nbsp;</td><td>79.21&nbsp;</td><td>78.10&nbsp;</td><td>77.11&nbsp;</td><td>57.83&nbsp;</td></tr><tr><td>Total Debt</td><td>132.30&nbsp;</td><td>24.06&nbsp;</td><td>17.05&nbsp;</td><td>11.73&nbsp;</td><td>14.89&nbsp;</td></tr><tr><td>ROCE</td><td>10.51&nbsp;</td><td>3.87&nbsp;</td><td>2.48&nbsp;</td><td>2.25&nbsp;</td><td>3.20&nbsp;</td></tr><tr><td>RONW</td><td>6.68&nbsp;</td><td>1.42&nbsp;</td><td>1.28&nbsp;</td><td>0.93&nbsp;</td><td>1.28&nbsp;</td></tr><tr><td>PATM(%)</td><td>1.28&nbsp;</td><td>0.38&nbsp;</td><td>0.38&nbsp;</td><td>0.29&nbsp;</td><td>0.32&nbsp;</td></tr><tr><td>CPM(%)</td><td>1.33&nbsp;</td><td>0.49&nbsp;</td><td>0.45&nbsp;</td><td>0.39&nbsp;</td><td>0.37&nbsp;</td></tr><tr><td>CEPS</td><td>2.28&nbsp;</td><td>0.82&nbsp;</td><td>0.67&nbsp;</td><td>0.50&nbsp;</td><td>0.66&nbsp;</td></tr><tr><td>Enterprise Value</td><td>166.83&nbsp;</td><td>32.45&nbsp;</td><td>31.39&nbsp;</td><td>25.78&nbsp;</td><td>18.06&nbsp;</td></tr></tbody></table></p><p align="justify"></p>
26-Nov-2018   12:42 Hrs IST Diksha Greens coming up with an IPO to raise Rs 13.32 crore <p align="justify"><strong>Diksha Greens</strong> <br></p><ul><li><div align="justify">Diksha Greens is coming out with an initial public offering (IPO) of 4,440,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 30 per equity share.<br></div></li><li><div align="justify">The issue will open on November 26, 2018 and will close on November 28, 2018.<br></div></li><li><div align="justify">The shares will be listed on SME Platform of BSE.<br></div></li><li><div align="justify">The share is priced 3.0 times higher to its face value of Rs 10.<br></div></li><li><div align="justify">Book running lead manager to the issue is Finshore Management Services.<br></div></li><li><div align="justify">Compliance Officer for the issue is Sumit Kumar Jain.<br></div></li></ul><p align="justify"><strong>Profile of the company</strong><br></p><p align="justify">The company was originally incorporated at Kolkata as ‘Diksha Timber Private Limited' on July 21, 2004 under the provisions of the Companies Act, 1956, with the Registrar of Companies West Bengal, Kolkata. Subsequently the company changed its name from ‘Diksha Timber Private Limited' to ‘Diksha Greens Private Limited' vide Certificate of Incorporation pursuant to name change dated November 29, 2017 and again the company was converted into a Public Limited Company and the name of the company was changed to Diksha Greens Limited vide Certificate of Incorporation consequent upon Conversion from Private to Public Limited Company dated February 06, 2018. <br></p><p align="justify">The company is engaged in the business of trading of timber, wooden logs, sawn timber and manufacturing of veneer sheets. The company imports the wooden logs and timber from countries such as Malaysia, Vietnam, and Burma in Asia, Nigeria, Ghana and Ivory Coast in Africa, Ecuador, Salvador, and Costa Rica in America, Solomon Island, Papua and Guinea etc. <br></p><p align="justify">After getting rich experience in timber business, in the year 2018, the promoters of the company decided to go for further expansion cum diversion of business activity. Having seen the potential of Agri market, the company acquired a state of art multi commodity cold storage located at Hooghly, West Bengal, India having capacity of 5000 MT towards storage of seasonal produce from various parts of the country and abroad.<br></p><p align="justify"><strong>Proceed is being used for:</strong><br></p><ul><li><div align="justify">Meeting the working requirement of the company; and <br></div></li><li><div align="justify">Meeting the Issue Expenses. <br></div></li></ul><p align="justify"><strong>Industry Overview</strong><br></p><p align="justify">The turnover of India's quarrying industry grows by a mere 1.8% in 2016 as costs rise and oversupply remains strong. Demonetisation and GST tax have a negative short-term effect on the industry; however, it should contribute to the growth of the organised business in the near future. Wood and wood products industry projected to se 8% CAGR over 2016-2021, as demand grows due to residential housing programmes and changing consumption trends.<br></p><p align="justify">The monthly Indian Wholesale Price Index (WPI) of wood and of products of wood and cork increased only marginally. Overall wood prices remained weak or falling as demonetisation swiped new orders from the plate of the construction and other sectors for a portion of 2016. Moreover, plywood manufacturers in Indian have faced rising production costs, yet opportunities to pass the increase on to consumers were limited due to slower demand from the construction sector over the year. </p><p align="justify">The imposition of service tax on the ocean freight component of all imports is expected to further push production costs and prices of imported raw materials, as 4.5% service tax over freight on cargoes imported on a delivered or CFR basis was extended in 2017. Nevertheless, as the construction industry in India is recovering from a temporary demonetisation effect, increasing consumption is expected to allow wood producers to start passing their rising costs on to consumers. Anticipated price recovery is expected to be an important driver of the industry's turnover value growth over the forecast period. <br></p><p align="justify"><strong>Pros and strengths<br></strong></p><p align="justify"><strong>Quality Assurance:</strong> The company is dedicated towards quality of the products which has helped it to maintain long term relations with customers and has also facilitated it to entrench with new customers. </p><p align="justify"><strong>Established relationship with customers and employees:</strong> As an established entity, in various aspects of the industry in India, it has managed to create, maintain and build the goodwill with customers. <br></p><p align="justify"><strong>Risks and concerns&nbsp; <br></strong></p><p align="justify"><strong>No long-term contracts:</strong> The company neither has any long-term contract with any of dealers/retailers/distributors nor any marketing tie up for products with any of retail chain operators etc. Its inability to sell the existing products as well as products to be produced, may adversely affect business and profitability in future.</p><p align="justify"><strong>Dependent on third party transportation providers:</strong> The company uses services of third party transportation providers for supply of raw materials as well as delivery of finished products. The company relies on fleet of trucks. In the event of non availability of fleet of trucks, due to strike or any other reason may have an adverse impact on the receipt of supplies of raw material and delivery of the finished products thereby adversely affecting the operations.<br></p><p align="justify"><strong>Outlook</strong><br></p><p align="justify">Diksha Green is engaged in the business of trading of timber, wooden logs, sawn timber and manufacturing of veneer sheets. It is managed by a team of experienced personnel exclusively focused on different aspects of business operations. This experience and industry relations allow it to deliver end to end solution and hence ensure effective handling of client requirements. The management team's experience and the understanding of the business will enable it to continue to take advantage of both current and future market opportunities. On the concern side, it requires high working capital for smooth day to day operations of business and any discontinuance or inability to acquire adequate working capital timely and on favourable terms may have an adverse effect on operations, profitability and growth prospects.&nbsp; <br></p><p align="justify">The company is coming out with a maiden IPO of 4,440,000 equity shares of Rs 10 each at a fixed price of Rs 30 per share to mobilize Rs 13.32 crore. On performance front, Profit after Tax for FY 2017-18 has been decreased to Rs 55.06 lakh from Rs 63.78 lakh representing decrease by 13.67% from FY 2016-2017. During the FY 2017-18 the revenue from operations decreased to Rs 4,163.42 lakh from Rs 5,418.55 lakh in the FY 2016-17. The company aims to continue to improve operational effectiveness and efficiencies to achieve cost reductions including overheads. This can be done through continuous project review and timely corrective measures in case of diversion and technology up-gradation.<br></p><p align="justify"><strong>(Financials in Rs Million)</strong><p align="justify"><table width="100%" border="1" cellspacing="1" cellpadding="1"><tbody><tr><th>Particulars</th><th>Mar&nbsp;2018</th><th>Mar&nbsp;2017</th><th>Mar&nbsp;2016</th><th>Mar&nbsp;2015</th><th>Mar&nbsp;2014</th></tr><tr><td>Net Sales</td><td>416.34&nbsp;</td><td>541.86&nbsp;</td><td>540.58&nbsp;</td><td>540.09&nbsp;</td><td>528.24&nbsp;</td></tr><tr><td>Total Income</td><td>418.30&nbsp;</td><td>549.24&nbsp;</td><td>542.26&nbsp;</td><td>542.49&nbsp;</td><td>530.24&nbsp;</td></tr><tr><td>PBIDT</td><td>23.25&nbsp;</td><td>18.51&nbsp;</td><td>16.84&nbsp;</td><td>18.04&nbsp;</td><td>14.87&nbsp;</td></tr><tr><td>PBT</td><td>8.15&nbsp;</td><td>8.81&nbsp;</td><td>6.66&nbsp;</td><td>5.86&nbsp;</td><td>5.62&nbsp;</td></tr><tr><td>PAT</td><td>5.51&nbsp;</td><td>6.38&nbsp;</td><td>4.60&nbsp;</td><td>4.03&nbsp;</td><td>3.86&nbsp;</td></tr><tr><td>Reserves and Surplus</td><td>109.00&nbsp;</td><td>103.49&nbsp;</td><td>97.11&nbsp;</td><td>92.52&nbsp;</td><td>59.43&nbsp;</td></tr><tr><td>Net Worth</td><td>113.93&nbsp;</td><td>108.42&nbsp;</td><td>99.10&nbsp;</td><td>94.50&nbsp;</td><td>64.66&nbsp;</td></tr><tr><td>Total Debt</td><td>109.27&nbsp;</td><td>71.07&nbsp;</td><td>38.79&nbsp;</td><td>48.60&nbsp;</td><td>52.25&nbsp;</td></tr><tr><td>ROCE</td><td>10.55&nbsp;</td><td>10.45&nbsp;</td><td>10.76&nbsp;</td><td>12.49&nbsp;</td><td>12.27&nbsp;</td></tr><tr><td>RONW</td><td>4.95&nbsp;</td><td>6.15&nbsp;</td><td>4.75&nbsp;</td><td>5.07&nbsp;</td><td>5.97&nbsp;</td></tr><tr><td>PATM(%)</td><td>1.32&nbsp;</td><td>1.18&nbsp;</td><td>0.85&nbsp;</td><td>0.75&nbsp;</td><td>0.73&nbsp;</td></tr><tr><td>CPM(%)</td><td>1.81&nbsp;</td><td>1.50&nbsp;</td><td>1.11&nbsp;</td><td>1.05&nbsp;</td><td>0.83&nbsp;</td></tr><tr><td>CEPS</td><td>15.25&nbsp;</td><td>16.51&nbsp;</td><td>30.24&nbsp;</td><td>28.48&nbsp;</td><td>8.39&nbsp;</td></tr><tr><td>Enterprise Value</td><td>92.20&nbsp;</td><td>58.64&nbsp;</td><td>22.19&nbsp;</td><td>34.34&nbsp;</td><td>28.54&nbsp;</td></tr></tbody></table></p><p align="justify"><p align="justify">&nbsp;</p>
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