Business
Issue
To part finance its plans to set up closed die forging manufacturing plant and general corpus fund needs, GFL is coming out with a maiden IPO of 2382000 equity shares of Rs. 10 each at a fixed price of Rs. 21 per share to mobilize Rs. 5.00 crore.
Issue opens for subscription on 29.06.18 and will close on 03.07.18. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue.
Issue constitutes 29.97% of the post issue paid up capital of the company. Having issued initial equity at par, it raised further equity in the price range of Rs. 21 to Rs. 21.70 and has also issued bonus shares in the ratio of 1.5 to 1 (February 2003) and 9 for 1 (September 2017). It has shown wrong ratio of 9 for 1 bonus in February 2003 (page no. 74 of offer document).
Average cost of acquisition of shares by the promoters is Rs. 8.46 and Rs. 9.12 per share. Post issue, GFL’s current paid up equity capital of Rs. 5.57 cr. will stand enhanced to Rs. 7.95 cr.
Performance
On performance front, for last four fiscals, GFL has posted turnover/net profits of Rs. 16.96 cr. / Rs. 0.61 cr. (FY14), Rs. 15.57 cr. / Rs. 0.47 cr. (FY15), Rs. 17.69 c.r / Rs. 0.25 cr. (FY16) and Rs. 17.79 cr. / Rs. 0.48 cr. (FY17).
For first nine months ended on 31.12.17 of FY18 it has earned net profit of Rs. 0.39 cr. on a turnover of Rs. 18.18 cr. Thus it has shown inconsistency in top and bottom lines for all these years. For last three fiscals it has posted an average EPS of Rs. 1.15 and an average RoNW of 11.05%. Issue is priced at a P/BV of 1.42 based on its NAV of Rs. 14.81 as on 31.12.17 and at a P/BV of 1.26 based on post issue NAV of Rs. 16.69.
If we annualize latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 32 thus issue is aggressively priced around industry average.
On merchant banker’s front, this is 76th mandate from its stable in last four fiscals and out of last 10 listings 2 opened at par and the rest with a premium ranging from 2.86% to 40% on the day of listing. (as per offer documents).
