Friday, December 24, 2010

Shekhawati Poly-Yarn IPO - Analysis, Recommendation, Review

Shekhawati Poly-Yarn, a textile firm, is entering capital market with its initial public offer (IPO) of 1.2 crore equity shares and aims to raise Rs 36 crore through IPO. The issue will constitute 54.54% of the fully diluted post issue equity share capital of the company.

The company is presently engaged in manufacturing of texturised and twisted yarn.

The IPO will open on December 27 and will close on December 29, 2010. The company has fixed the price at Rs 30 a share.

The proceeds of the IPO will be utilized to commence manufacturing of Knitted Fabric from Texturised Yarn; for buying new 30 twisting machines and installation of new 30 knitting machines; buying corporate office at an estimated cost of Rs 325 lakh and working capital requirements. After this expansion, the company will have 35 machines for twisting yarn with capacity of 4,620 MTPA, 30 machines for knitting yarn with 1,980 MTPA and 20 for texturising yean with capacity of 27,400 MTPA.

Hem Securities Limited is the book running lead manager to issue.

Recommendation:
We would not recommend investors to invest in this IPO at this time.

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