Should you invest in Captain Polyplast IPO?
Gujarat based Captain Polyplast is coming up with an IPO on 26-Nov-13. This IPO would get listed on the BSE SME Platform. This issue consists of 19.8 Lakhs shares for Rs 12.70 Crores. In this article, I would provide analysis about Captain Polyplast IPO and whether it is good for investment or not.
About Captain Polyplast Ltd IPO
The company is a manufacturer, exporter & a trading company of supreme quality HDPE Pipes and Irrigation Equipments including Drip Irrigation Systems, Sprinkler Irrigation Systems, Disc Filters, Screen Filters, Hydro-Cyclone Filters, Sand Filters, Compression Fittings, Valves (Electrical and Mechanical), Fertilizer Tanks, Digital Controllers, Pressure Gauges, etc.
Issue details of Captain Polyplast IPO
- IPO opens: 26-Nov-2013
- IPO closes: 28-Nov-2013
- Face value: Rs 10
- Issue price: Rs 30
- Minimum bid: 4,000 shares for retail investors and in multiples of 4,000 shares thereof
- Minimum investment: Rs 120,000
- Lead managers: Hem Securities Ltd
- Listing: BSE SME
- Download Prospectus of Stellar Capital IPO
The purpose of the IPO: The funds would be used for the following purposes.
- To Fund our Expansion Plans
- General Corporate Purpose
- To Meet the Issue Expenses
- The company has posted revenue of Rs 2326.36 Lakhs for the year ended Mar-2009 and 6281.26 Lakhs for the year ended Mar-2013.
- The company has posted a profit of Rs 39.62 Lakhs for the year ended Mar-2009 and Rs 266.25 Lakhs for the year ended Mar-2013.
Reasons to invest in Captain Polyplast Ltd IPO
- Good growth in the revenues in the last 5 years.
- Profit has increased from 1.7% (year ended Mar-09) to 4.24% (year ended Mar-13). This indicates good operational efficiency in improving the margins.
- Based on 6 months performance ended Sep-13, yearly revenues are expected to grow at 21% in FY 2013-14 also.
Reasons not to invest in Captain Polyplast Ltd IPO
- The IPO’s listed on the BSE SME platform are trading on low volume and liquidity is an issue.
- Minimum investment required is Rs 1.20 lakhs.
Recommendation / Investment strategy:
- Average EPS for the last 3 years is Rs 3.46. At issue price of Rs 30, this translates to a P/E ratio of 8.67x.
- It’s EPS for year ended Mar-2013 is Rs 5.01. The P/E ratio translates to 6x.
- It peers like Responsive Industries Ltd are trading at a P/E ratio of 52x (highest) and Sintex Industries Ltd at 2 (lowest). Hence the issue price of Captain Polyplast IPO looks little expensive for such SME IPO.
- Though company performance is good, the issue price looks expensive. Post listing if this stock is available at discounted price, one can look buying such stock to keep for medium term investment.
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Captain Polyplast IPO