Kushal Tradelink IPO – Avoid

Kushal Tradelink IPO-Aug-2013Kushal Tradelink IPO – Avoid

There is flood of SME IPO’s this week. There are already Silverpoint Infratech IPO and VKJ Infratech IPO’s currently on. Third IPO is Kushal Tradelink has opened for subscription yesterday. In this article, I would elaborate about Kushal Tradelink IPO and whether we can invest in Kushal Tradelink IPO or not?

About Kushal Tradelink

Ahmadabad based Kushal Tradelink Ltd is a leading wholesale of paper and paper products. There are 600 to 700 client base for this company. Its core business is craft paper, waste paper and duplex board. Kushal Tradelink is issuing shares of 79.30 Lakh shares @ Rs 35 per share aggregating to Rs 27.76 Crores. It would be listed in BSE SME platform.

Issue details:

  • IPO opens: 14-Aug-2013
  • IPO closes: 21-Aug-2013
  • Face value: Rs 10
  • Issue price: Rs 35
  • Minimum bid: 4,000 shares and in multiples of 4,000 shares thereon
  • Minimum investment: Rs 140,000
  • Lead managers: Aryaman Financials
  • Listing: BSE SME
  • Prospectus:

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

  • Purchase and setting up of corporate office
  • Long term working capital requirements
  • General corporate purposes.

Company financials

  • Company revenues have grown from Rs 63.85 Crores in FY2009 to Rs 246.10 Crores in FY2013.
  • Coming to profits, company has posted 1% margins in FY2009 and 1.66% in FY2013.
  • Average EPS for the last 3 years is Rs 1.77

Kushal Tradelink IPO

Reasons to invest Vishal Tradelink IPO

  • Good growth in the revenue in the last 5 years

Reasons not to invest in Vishal Tradelink IPO

  • Company runs on thin margins. Thought revenue has increased substantially; such low margins can be wiped out with any small change in uncertain conditions.
  • This is general wholesale business and any stiff competition can create challenges to such business.
  • Companies can directly sell paper products to retailers instead through such wholesaler.

Recommendation / Investment strategy:

The minimum investment required is Rs 1.40 lakhs. The SME IPO’s listed are trading with very low volume and the liquidity has been a problem. Company runs on thin margins. Considering all these negative points, my suggestion to investors is to stay away from this IPO.

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Kushal Tradelink IPO

One comment

  • Shubham

    Sir can you guide about the quality of this stock as of now ? It has risen considerably , does the fundamentals and technical analysis show further growth ?

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