Tuesday, April 19, 2011

Innoventive Industries IPO - Analysis, Recommendation, Review

Innoventive Industries, a pune based company has come out with a public issue of Rs 219.58 crore. The company is engaged in the business of manufacturing and sale of precision steel tubes, tubular components, auto components, machined components and other steel products.

The IPO will open on April 26 and will close on April 28 for qualified institutional bidders. Subscription for retail and non-institutional investors will close on April 29. The company has declared the price band of Rs 117 - 120.

The company plans to utilize the IPO proceeds for capacity expansion of manufacturing facility with Rs 163.06 crore and repayment of term loans worth Rs 50 crore.

For the period of nine months ended December 2010, it has reported net profit of Rs 41.80 crore on total income of Rs 457.02 crore. Chandu Laxman Chavan-led Innoventive Industries Limited, formerly Arihant Domestic Appliances Ltd, is a multi-product company catering to automobile, energy, oil and general engineering sector. The company received its first round of PE funding from Lighthouse LLC. Standard Chartered Mid-Market Mid-Cap Fund has invested $10 million in the company earlier this year.

Axis Bank Limited and Avendus Capital Private Limited are book running leading managers to the issue.

Recommendation:
ICRA has assigned Grade 3 to the IPO indicating average fundamentals. We would not recommend this IPO to investors at this time.


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