Lakhotia Polyesters Ltd IPO – Avoid

Latest Initial Public Offerings (IPO)Lakhotia Polyesters Ltd IPO – Avoid

Nasik based, Lakhotia Polyesters Ltd is coming up for public issue for Rs 5.082 Crores at a price of Rs 35 (Rs 10 face value with a premium of Rs 25 per share). Should we invest in Lakhotia Polyesters IPO?

About Lakhotia Polyesters Ltd

Lakhotia Polyesters is formed in 2005 and is into yarn manufacturing. The company is engaged in the business of manufacturing of lacquer coated Polyester films, transfer foils and M type metallic yarns, which are appropriate for textile, printing, decoration and packing industry and manufacturing of grey fabrics used in sarees and as interline cloth.

Issue details:

  • IPO opens: 19-Mar-2013
  • IPO closes: 21-Mar-2013
  • Issue price: Rs 35 per share
  • Face value: Rs 10
  • Minimum bid: 4,000 shares and in multiples of 4,000 shares thereon.
  • Minimum investment: Rs 140,000
  • Leader managers: Intensive Fiscal Services (P) Ltd
  • Registrar: Sharex Dynamic (India) Private Limited
  • Listing: BSE SME
  • Prospectus:

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

  • Augmenting of long term working capital requirement and
  • General corporate purposes

Company financials

The revenue for the financial year ending Mar-2012 has declined by 25% comparing to previous financial year. Also for the 6 months ending Sep-2012, the revenues are at Rs 3.34 Crores. If we annualize these revenues for this financial year (FY 2012-13), we expect a revenue of Rs 6.68 Crores which shows a 15% dip in revenue comparing to previous financial year.

Similarly profits for FY 2011-12 shows a decline of 48% comparing to previous financial year 2010-11.

Lakhotia Polyesters Ltd IPO

Recommendation / Investment strategy: The Company revenues have been falling for the past one and half year. The average EPS for the last 3 fiscal years are Rs 1.05 and six month sending Sep-2012 is Rs 0.81. This translates the P/E at Rs 35+ which is high in industry. Considering the declining revenues and high stock price, investors may stay away from such IPO.

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Topic: Lakhotia Polyesters Ltd IPO

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