Monday, February 14, 2011

Fineotex Chemical IPO - Analysis, Recommendation, Review

Fineotex Chemical (FCL) is entering the capital market with an IPO of 42,11,160 equity shares through 100% book building. The company is in the business of manufacturing specialty chemicals and enzymes consumed by the textile and garment industry, leather, water treatment, construction, paper, paint, adhesives, agrochemical and other industries.

The issue will open for subscription on February 23, 2011 and close on February 25, 2011. The company has set the price band at Rs 60-72 per equity share of face value of Rs 10 each.

FCL has an existing plant at Mahape in Navi Mumbai with an installed capacity of 5,000 MT/annum. The company proposes to set up a new manufacturing facility, at Khopoli in Maharashtra, for the production of specialty chemicals and enzymes with a capacity of 13,125 MT/annum, setting up of sales office in Mumbai and meeting working capital requirement, public issue expenses and general corporate purpose.

For the six months ended September 30, 2010, the company posted a total income of Rs 13.48 crore and profit after tax of Rs 2.15 crore.

Indbank Merchant Banking Services Ltd is the book running lead manager to the IPO, Hem Securities Limited is the syndicate member and Bigshare Services Private Limited is the registrar.

Recommendation:
CARE has assigned Grade 2 to the IPO. Given the volatility in the market, we would not recommend this IPO to investors at this time.


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