Tijaria Polypipes Limited, a company engaged in the business of plastic pipes, has entered the capital markets with an Initial Public Offer (IPO) of Equity Shares having a Face Value of Rs.10/- each. The IPO would be open for subscription between Tuesday, September 27, 2011 and Thursday, September 29, 2011
Tijaria Polypipes Limited IPO is a Fixed Price Issue meaning thereby that there would be no Price Band for the IPO, but only a Fixed Issue Price of Rs.60/- per equity share. The company proposes to list its shares on both the exchanges BSE and NSE. Applications can be made in a bid lot of 100 Equity Shares and in multiples thereof, translating to a minimum application of Rs.6,000/- Hem Securities Limited is the Book Running Lead Manager to the Issue and Sharex Dynamic (India) Pvt. Ltd. is the Registrar to the Issue
Company Background:
Tijaria Polypipes Ltd is an ISO 9001:2000 certified company engaged in the business of plastic pipes. Tijaria is manufacturer of pre-lubricated HDPE pipes (PLB HDPE), PVC & SWR pipes, sprinkler pipes and systems, flat tubes, fittings and PET straps under the registered brand name of Tijaria and Vikas. The company produces a big product range in the field of plastics, HDPE sprinkler, drip irrigation, micro irrigation, telecommunications etc.
Tijaria's product offerings include HDPE pipes, PVC pipes, LLDPE pipes, HDPE DWC pipes, PLB HDPE Ducts, MDPE pipes, uPVC RIGID & BLUE CASING pipes, Pet Granules, MICRO/DRIP Irrigation System, SWR PIPES & FITTINGS, PPR Pipes & Fittings, HDPE Sprinkler System. These products are used in irrigation, telecommunication, industrial, and infrastructure and housing sector. Total production capacity of Tijaria Polypipes is 25163 million tonnes per annum (MTPA)
According to the company's website, Tijaria is coming up with expansion cum diversification plan with a separate manufacturing unit at Sitapura Industrial Area, Jaipur
IPO Grading
Credit Rating Agency ICRA has assigned an IPO Grade 2/5 to the upcoming IPO of Tijaria Polypipes Ltd. The rating implies that as per ICRA, company has 'Below Average Fundamentals'. ICRA assigns IPO grading on a scale of 5 to 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals
Analysis of Financials
For the FY ended 2011, the company has posted total revenue at Rs.119 Crores and earned a NPAT of Rs.7 Crores. Thus, the Net Profit Margin of the company turns out to be just under 6%. A conjoint reading of the EPS at Rs.5.3 with the Issue Price of Rs.60/- per share means that the price of the IPO is at a PE Ratio of about 11.30 times of its earnings which can be considered as aggressive considering the PE multiples of similar listed companies
Other Remarks:
There are serious issues with the management of the company. The company has not followed some of the accounting standards issued by ICAI such as AS-15 on Employee Benefits as also it failed to attach Cash Flow Statement as required by AS-3 in its accounts for the Financial year ended March 31, 2008 and March 31, 2009. Besides, for the aforesaid two years, the company also failed to print disclosures regarding Related Party transactions as required by AS-18. Besides, the company's top 10 customers contributed about 70% of total sales in FY10
Considering the pricing of Rs.60/- per share and a look at the peer PE multiples suggest the pricing of the Issue to be clearly aggressive and investors may choose to give it a skip
Tijaria Polypipes Limited IPO is a Fixed Price Issue meaning thereby that there would be no Price Band for the IPO, but only a Fixed Issue Price of Rs.60/- per equity share. The company proposes to list its shares on both the exchanges BSE and NSE. Applications can be made in a bid lot of 100 Equity Shares and in multiples thereof, translating to a minimum application of Rs.6,000/- Hem Securities Limited is the Book Running Lead Manager to the Issue and Sharex Dynamic (India) Pvt. Ltd. is the Registrar to the Issue
Company Background:
Tijaria Polypipes Ltd is an ISO 9001:2000 certified company engaged in the business of plastic pipes. Tijaria is manufacturer of pre-lubricated HDPE pipes (PLB HDPE), PVC & SWR pipes, sprinkler pipes and systems, flat tubes, fittings and PET straps under the registered brand name of Tijaria and Vikas. The company produces a big product range in the field of plastics, HDPE sprinkler, drip irrigation, micro irrigation, telecommunications etc.
Tijaria's product offerings include HDPE pipes, PVC pipes, LLDPE pipes, HDPE DWC pipes, PLB HDPE Ducts, MDPE pipes, uPVC RIGID & BLUE CASING pipes, Pet Granules, MICRO/DRIP Irrigation System, SWR PIPES & FITTINGS, PPR Pipes & Fittings, HDPE Sprinkler System. These products are used in irrigation, telecommunication, industrial, and infrastructure and housing sector. Total production capacity of Tijaria Polypipes is 25163 million tonnes per annum (MTPA)
According to the company's website, Tijaria is coming up with expansion cum diversification plan with a separate manufacturing unit at Sitapura Industrial Area, Jaipur
IPO Grading
Credit Rating Agency ICRA has assigned an IPO Grade 2/5 to the upcoming IPO of Tijaria Polypipes Ltd. The rating implies that as per ICRA, company has 'Below Average Fundamentals'. ICRA assigns IPO grading on a scale of 5 to 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals
Analysis of Financials
For the FY ended 2011, the company has posted total revenue at Rs.119 Crores and earned a NPAT of Rs.7 Crores. Thus, the Net Profit Margin of the company turns out to be just under 6%. A conjoint reading of the EPS at Rs.5.3 with the Issue Price of Rs.60/- per share means that the price of the IPO is at a PE Ratio of about 11.30 times of its earnings which can be considered as aggressive considering the PE multiples of similar listed companies
Other Remarks:
There are serious issues with the management of the company. The company has not followed some of the accounting standards issued by ICAI such as AS-15 on Employee Benefits as also it failed to attach Cash Flow Statement as required by AS-3 in its accounts for the Financial year ended March 31, 2008 and March 31, 2009. Besides, for the aforesaid two years, the company also failed to print disclosures regarding Related Party transactions as required by AS-18. Besides, the company's top 10 customers contributed about 70% of total sales in FY10
Considering the pricing of Rs.60/- per share and a look at the peer PE multiples suggest the pricing of the Issue to be clearly aggressive and investors may choose to give it a skip
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