DEBARRING DISCERNING INVESTORS
MAX. ISSUE SIZE (Rs) : 25 crores
PRICE BAND (Rs) : 35 (Fixed)
ISSUE OPENS/CLOSES : 18th to 23rd October, 2007
LISTING : BSE.
Rathi Bars, which manufactures CTD steel bars and TMT steel bars proposes to raise funds for the expansion and modernization of its current business.
Its bars are used as reinforcement material in construction activities and the company has backward integrated to produce MS ingots, its primary raw material, in-house. A Northern India based company, it has presence across 800 retail outlets.
The company operates at 85 per cent of its current production capacity of 80,000 mtpa , which justifies its plan to enhance the same to 1,00,000 mtpa by end FY’08.
The company faces intra-family competition in its space and these competitors too operate under the same brand name. Furthermore, the overhang of taxation and legal disputes ( including a criminal case ) too raise corporate governance related doubts.
Rathi Bars topline and bottomline have grown at a CAGR of 28 per cent and 37 per cent respectively over the last four years. However, a closer scrutiny of the financials reflect that the margins of this company are shrinking, both at the operating (3 per cent) and net level ( 2 per cent).
While a forward P/E of 6 does not appear too conventionally expensive, it is in line with the discounting accorded in this sector. The USP of this company thus clearly lies in the fact that it is engaged in a space related to infrastructure.
For discerning investors though, this might not be quite enough especially at a time when larger and better pedigreed companies are queuing up to enter this space .
MAX. ISSUE SIZE (Rs) : 25 crores
PRICE BAND (Rs) : 35 (Fixed)
ISSUE OPENS/CLOSES : 18th to 23rd October, 2007
LISTING : BSE.
Rathi Bars, which manufactures CTD steel bars and TMT steel bars proposes to raise funds for the expansion and modernization of its current business.
Its bars are used as reinforcement material in construction activities and the company has backward integrated to produce MS ingots, its primary raw material, in-house. A Northern India based company, it has presence across 800 retail outlets.
The company operates at 85 per cent of its current production capacity of 80,000 mtpa , which justifies its plan to enhance the same to 1,00,000 mtpa by end FY’08.
The company faces intra-family competition in its space and these competitors too operate under the same brand name. Furthermore, the overhang of taxation and legal disputes ( including a criminal case ) too raise corporate governance related doubts.
Rathi Bars topline and bottomline have grown at a CAGR of 28 per cent and 37 per cent respectively over the last four years. However, a closer scrutiny of the financials reflect that the margins of this company are shrinking, both at the operating (3 per cent) and net level ( 2 per cent).
While a forward P/E of 6 does not appear too conventionally expensive, it is in line with the discounting accorded in this sector. The USP of this company thus clearly lies in the fact that it is engaged in a space related to infrastructure.
For discerning investors though, this might not be quite enough especially at a time when larger and better pedigreed companies are queuing up to enter this space .
