Tuesday, April 26, 2011

Vaswani Industries IPO - Analysis, Recommendation, Review

Vaswani Industries, coal-based sponge iron manufacturer, has come out with an IPO of 10 million shares. The issue will constitute 42.57% of the company's post-issue paid-up capital. The company currently has installed capacities of 90,000 TPA, 36,000 TPA and 11.5 Mega Watt (MW) to produce coal based sponge iron, billet and power respectively.

The IPO will open on April 29 and close on May 3. The company has fixed a price band of Rs 45 to Rs 49 per share.

The IPO proceeds are proposed to be used for pre-payment of the term loan (Rs 24.38 crore) and long term working capital (Rs 17.47 crore).

Ashika Capital Limited is the book running lead manager of the issue and Link Intime India Pvt Ltd is the registrar of the issue.

Recommendation:
ICRA has assigned Grade 2 to the IPO indicating below average fundamentals. We would not recommend this IPO to investors at this time!


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