Monday, September 13, 2010

Tirupati Inks FPO - Analysis, Recommendation, Subscription, Allotment, Listing

Analysis:
Following recent success of the IPOs, more and more companies are coming up with IPOs and FPOs. The recent one, Tirupati Inks, a printing ink and polyester films company is entering the capital markets with a FPO (Follow on public offer) aggregating to Rs 51.5 crore. The promoters are contributing Rs 11.51 crore in this 100% book build issue. The company’s equity shares are presently listed on DSE and after this Issue it will be listed on BSE & DSE.

Tirupati Inks has two manufacturing facilities i.e. one at Kanpur & another at Jammu. The Company exports the printing inks to various countries like Nigeria, Turkey, Malaysia, Mauritius, Jordan, Italy, etc. Its export revenue from Inks during the previous year ending March 31, 2010 was Rs 422.46 lakh (FOB value) constituting 20.83% of the total printing ink turnover of the company. The company’s total income for the year ended March 31, 2010 was Rs 7523.09 lakh and profit after tax at Rs 215.42 lakh as against total income of Rs 5019.68 lakh and profit after tax of Rs 80 lakh for the previous year.

The price band is fixed at Rs 41 to Rs 43 for the equity share of the face value of Rs 10 each. This issue opens on September 14, 2010. The issue for QIB bidders will close on September 16, 2010 and for bidders other than QIBs closes on September 17, 2010.

The company proposes to utilize part of the net proceeds of the issue to raise financial resources for setting up new facility for manufacturing of specialty inks like digital inks, UV inks, offset printing inks and ink concentrates. Part of the fund is also proposed to be used to augment and support existing product range of the company which includes Rotogravuere Inks and Flexographic Inks used in printing of flexible packaging material. In addition to this, the Issue proceeds are proposed to be used for company’s inorganic growth plans by way of acquisitions and strategic investments. Part of the proceeds is also proposed to be used as capital expenditure on Lab equipments for existing facilities.

Ashika Capital is the sole book running lead manager for the issue and Beetal Financial & Computer Services Pvt. Ltd is the registrar to the issue.

Recommendation:
Avoid this FPO for now. There are better IPOs to invest in the market.

Subscription:
Tirupati Inks FPO managed to get over 10 times subscribed after initial 2 days of bad run. At the close of the IPO,
QII segment got subscribed by 1.78 times
NII segment got subscribed by 23.18 times
Retail segment got subscribed by 12.59 times

Allotment:
Click here to check if you have been alloted Tirupati Inks shares!

Listing:
Tirupati Inks listed at Rs 53.95 on BSE as against issue price of Rs 43, a premium of 25.47%. It surged 42.91% to Rs 61.45 - a high point in early trade before closing the day at Rs 36.65, a discount of 14.77% against the issue price.


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