Wednesday, July 28, 2010

Aster Sillicates IPO

Analysis
Aster Silicates is coming out with a public issue of Rs 53.10 crore on June 24, 2010. The company has fixed a price band for this issue at Rs 112-118 per equity share. Issue will close for subscription on June 28.

Aster is engaged in the business of manufacturing of sodium silicate which includes food grade sodium silicate, special drilling grade silicate and detergent grade silicate. It produces sodium silicate both in glass and liquid form.

The company intends to use issue proceeds for expansion of manufacturing facilities and additional working capital requirements. Promoter Mahesh A Maheshwari and Namrata M Maheshwari hold 57.40% & 11.92% stake in company.

The book running lead manager to the issue is Saffron Capital Advisors Private Limited and Sharepro Services (India) Private Limited is the registrar.

Recommendation
We would not recommend investors to invest in Aster Sillicates IPO at this time. The IPOs are not going through a good time in the recent months. Some of the IPOs had to be withdrawn or just managed to get fully subscribed. This IPO as with most of the recent IPOs have been expensively priced. With the negative cash flow from operating and the major revenue concentration from top 5 clients, there may be too much risk involved and the IPO is not cheap for an investor to take the risk.

Subscription
The IPO got subscribed by 4.5 times at the close. At the close of the IPO,

QII segment got subscribed by 0.01 times
NII segment got subscribed by 12.46 times
Retail segment got subscribed by 7.41 times

Allotment
The allotment has been delayed because of certain allegations against Mr. Maheshwari. Click here to see the response from the company. The investors can choose to withdraw their bids within 10 days.
Click here to check if you have been alloted Aster Sillicates shares!

Listing
Aster Sillicates had a great listing today. The share closed at Rs 214, a rise of 81.36% over its issue price of Rs 118 on NSE. It has touched an intraday high of Rs 241.90 and low of Rs 123.40, after opening at Rs 128.05. It has seen trading volume of 5.95 crore shares and turnover of Rs 971 crore. On the BSE, a share ended at Rs 199.10, after seeing day's high of Rs 225 and low of Rs 123.50.


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