HPC Biosciences IPO – Review

Latest Initial Public Offerings (IPO)

HPC Biosciences IPO – Review

There were 3 SME IPO’s that hit this year before budget. Another Delhi based SME Company, HPC Biosciences has come up for fresh public issue of 45 lakh shares @ Rs 35 per share totaling to Rs 15.75 Crores. Should we subscribe for HPC Biosciences IPO?

About HPC Biosciences

The company is engaged in the agriculture operations of cultivation, processing and distribution of agriculture commodities like wheat, paddy, sugar cane, fruits, vegetables and flowers.

Current issue to public

Issue price: Rs 35 per share

  • Minimum bid: 4,000 shares and multiples there-of
  • Minimum investment: Rs 140,000
  • IPO opens: 1-Mar-2013
  • IPO closes: 5-Mar-2013
  • Book Running Leader managers (BRLM): Guiness Corporate Advisors Ltd
  • Listing: BSE SME
  • Prospectus: http://www.bseindia.com//downloads/ipo/2013122152118DP-HPC.pdf

Purpose of the IPO: The funds would be used for the following purposes.

  • Development of green house cultivation
  • Development of farm land for transition to organic farming
  • Strengthen supply chain management
  • Procurement of farm tools and equipments
  • General corporate expenses

Company financials

HBC Biosciences has started its operations in 2008 and its income was  only Rs 5,000 in 2008 and Rs 7,000 in 2011. Only in the year ending Mar-2012, it had income of Rs 3.67 crores (that too the stock appreciation is Rs 77 lakhs). For the 8 months ending Nov-2012, its income shows Rs 3.64 Crores.

Coming to its profits, it was under loss up to year ending Mar-2011.

For the year ending Mar-12 (2011-12), it made revenue of Rs 3.67 crores and profit of Rs 3.04 crores. This means the margin is 82% on income.

For the 8 months ending Nov-2012, it made revenue of Rs 3.64 crores and profit of Rs 2.95 crores. This means the margin is 81% of income.

Recommendation:  There is abnormal increase in revenues and profits in the last 20 months where it published the nos, whereas company has not been doing well in the previous 4 years (2008 to 2011). It does not show consistent performance. It would be very difficult to assess such companies as to how they would perform in the long run. Retail investors should be little cautious before investing in such IPO’s.

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HPC Biosciences IPO – Review

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