M and B Switchgears Limited, engaged in manufacturing of distribution transformers, power transformers, furnace/rectifier transformers and special purpose transformers, has entered the capital markets with an Initial Public Offer (IPO) of 50,00,000 Equity Shares with a Face Value of Rs.10/- each
The 100% Book Building Issue is offered in a Price Band of Rs.180/- to Rs.186/- per equity share with a bid lot of 30 Equity Shares and in multiples thereof. The IPO has been rated by rating agency ICRA. D&A Financial Services Private Limited is the Book Running Lead Manager to the Issue. Sumpoorna Portfolio Limited and Inventure Growth and Securities Limited are the Syndicate Members while Bigshare Services Private Limited is the Registrar to the Issue. The IPO is scheduled to remain open for subscription between Wednesday, September 28, 2011 to Wednesday, October 05, 2011
Company Profile:
M and B Switchgears Limited is in business of manufacturing transformers for more than 30 years. The Company's existing annual production capacity in terms of KVA is 75,000 KVA of transformer per month on single shift basis and annual aggregate capacity is 9,00,000 KVA per annum.
M and B Switchgears Limited has the capacity to manufacture 5,109 transformers per annum. Company's client-base includes almost all electricity boards and many industrial groups including steel, power, pharma, textile, automobile etc., public sector companies like NCL, SECL, WCL, Ordanace factory and various other government utilities.
The company is promoted by Mr. Shyam Sunder Mundra, Mr. Vikalp Mundra and Mr. Anurag Mundra
IPO Grading:
ICRA has assigned an IPO Grade 2 to M and B Switchgears IPO. This means as per CARE, company has "Below Average Fundamentals". ICRA assigns IPO grading on a scale of IPO Grade 5 to IPO Grade 1, with IPO Grade 5 indicating strong fundamentals and IPO Grade 1 indicating poor fundamentals
Analysis of Financials:
The following is the summary Statement of Profit and Loss and Statement of Assets and Liabilities as per the Red Herring Prospectus filed with NSE:
A look at the Balance Sheet would unlock that the company's Equity Share Capital has increased from Rs.85.83 Lakhs for the year ended FY10 to Rs.1500 Lakhs for the year ended FY11, while at the same time the Reserves and Surpluses have reduced from Rs.965.16 Lakhs in FY10 to Rs.112 Lakhs in FY11. It sounds astonishing when companies ask for a premium of Rs.170/- to Rs.176/- on the Face Value, which translates to a post issue premium of Rs.45 Crores when the company has barely Rs.1.12 Crores in the reserve as per the latest audited accounts
M and B has glaring negative cash flows from operations to the tune of Rs.161.95 in FY09 and Rs.444.29 in FY10. Besides, in last three years the company's average return on net worth has been at around 6.4%, which can be considered low. A look at the listed peers may clearly provide quality alternatives at much reasonable prices in the listed space
The 100% Book Building Issue is offered in a Price Band of Rs.180/- to Rs.186/- per equity share with a bid lot of 30 Equity Shares and in multiples thereof. The IPO has been rated by rating agency ICRA. D&A Financial Services Private Limited is the Book Running Lead Manager to the Issue. Sumpoorna Portfolio Limited and Inventure Growth and Securities Limited are the Syndicate Members while Bigshare Services Private Limited is the Registrar to the Issue. The IPO is scheduled to remain open for subscription between Wednesday, September 28, 2011 to Wednesday, October 05, 2011
Company Profile:
M and B Switchgears Limited is in business of manufacturing transformers for more than 30 years. The Company's existing annual production capacity in terms of KVA is 75,000 KVA of transformer per month on single shift basis and annual aggregate capacity is 9,00,000 KVA per annum.
M and B Switchgears Limited has the capacity to manufacture 5,109 transformers per annum. Company's client-base includes almost all electricity boards and many industrial groups including steel, power, pharma, textile, automobile etc., public sector companies like NCL, SECL, WCL, Ordanace factory and various other government utilities.
The company is promoted by Mr. Shyam Sunder Mundra, Mr. Vikalp Mundra and Mr. Anurag Mundra
IPO Grading:
ICRA has assigned an IPO Grade 2 to M and B Switchgears IPO. This means as per CARE, company has "Below Average Fundamentals". ICRA assigns IPO grading on a scale of IPO Grade 5 to IPO Grade 1, with IPO Grade 5 indicating strong fundamentals and IPO Grade 1 indicating poor fundamentals
Analysis of Financials:
The following is the summary Statement of Profit and Loss and Statement of Assets and Liabilities as per the Red Herring Prospectus filed with NSE:
A look at the Balance Sheet would unlock that the company's Equity Share Capital has increased from Rs.85.83 Lakhs for the year ended FY10 to Rs.1500 Lakhs for the year ended FY11, while at the same time the Reserves and Surpluses have reduced from Rs.965.16 Lakhs in FY10 to Rs.112 Lakhs in FY11. It sounds astonishing when companies ask for a premium of Rs.170/- to Rs.176/- on the Face Value, which translates to a post issue premium of Rs.45 Crores when the company has barely Rs.1.12 Crores in the reserve as per the latest audited accounts
M and B has glaring negative cash flows from operations to the tune of Rs.161.95 in FY09 and Rs.444.29 in FY10. Besides, in last three years the company's average return on net worth has been at around 6.4%, which can be considered low. A look at the listed peers may clearly provide quality alternatives at much reasonable prices in the listed space
0 comments:
Post a Comment