Sunstar Realty Ltd IPO – should we invest?
Sunstar Realty Ltd IPO – Quick Review
Sun star Realty Ltd has come out for public issue for 53.10 lakhs of shares @ at a price of Rs 20 aggregating to Rs 10.62 Crores. Let us look at what company is doing, what are its financials, how the competition is there and finally is it good to invest in Substar IPO or not.
About Sunstar Realty Ltd
Sunstar Realty is a real estate company working on development residential, commercial, retail and other projects. Sunstar Realty Ltd is currently running two diversified planned projects at Gujarat. It entered into an agreement with Triveni Infratech to buy 2.51 acres of land at West Bengal for further development. Company indicates that it received a work order worth Rs 20.61 crore from Jain Infraprojects.
The promoters are Deepak Jesingbhai Patel, Kavita Patel, Heaven Petrochem Private Limited.
Current issue to public
Issue price: Rs 20 per share
Issuing size: Rs. 10.62 Crores
Minimum bid: 6,000 shares and multiples there-of
Minimum investment: Rs 120,000
IPO opens: 18-Feb-2013
IPO closes: 21-Feb-2013
Book Running Leader managers(BRLM) : Guiness Corporate Advisors Private Limited
Listing: BSE SME
Purpose of the IPO: The funds would be used for the following purposes.
- To finance the expenditure of work order awarded by Jain Infraprojects Limited
- To finance the development and construction related expenditures of our Planned Projects.
- Brand Building and General Corporate purposes
- Issue expenses
How the company is doing in terms of financials?
Year ending Mar-11 – Rs 190 lakhs
Year ending Mar-12 – Rs 34.36 lakhs
Year ending Sep-12 – Rs 225 lakhs
Year ending Mar-11 – Rs 0.28 lakhs
Year ending Mar-12 – Rs 5.55 lakhs
Year ending Sep-12 – Rs 13.77 lakhs
The margins are at 0.15% for year ending Mar-2012 and 16.15% for 6 months ending Sep-12.
Recommendation: The Company is small in size. The revenues for financial year ending Mar-2012 was only Rs 34.36 lakhs with a margin of 0.15% and in 6 months ended Sep-12 are 225 lakhs with a margin of 6.12% for 6 months ended Sep-12. With its issue price of Rs 20, the Profit Earning Ratio (P/E Ratio) is at 143x.
Realty business is under stiff completion. Due to greater risk involved in realty business, these low margins may get eroded in future. As far as BRLM's performance is concerned, there were 3 IPO's came thru them and two of them have given negative returns on listing day. Retail investors can stay away from this IPO.
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Sunstar Realty Ltd – IPO – Quick Review