CAN BURN A HOLE IN YOUR POCKET
MAX.ISSUE SIZE (Rs) : 26 crores
PRICE BAND (Rs) : 10 - 12
ISSUE OPENS/CLOSES : 28th November 2007 to 3rd December 2007
LISTING : BSE, NSE.
A mini-cement manufacturer, Burnpur Cement Limited (BCL) has limited presence across the eastern Indian states of Bihar, Jharkhand and West Bengal.
At a time, when demand for cement is burgeoning, this company’s capacity utilization stands at a pitiable 29 per cent. IPO funds are now being sought to set-up an integrated clinkerisation and cement grinding plant of 800 TPD capacity expandable to 1600 TPD.
The expansion plans, to say the least, appear highly ambitious given BCL’s uninspiring track record hitherto, Given the absence of any niche or critical mass, chances of BCL becoming an acquisition target is also minimized.
The overdependence on external suppliers for key production inputs is well reflected in operating margins that are barely 50 per cent of the industry average.
The financials, both past and estimated appear very modest. This coupled with the high percentage of debtors outstanding ( over 50 per cent of sales ) in a booming industry surely cannot enthuse investors.
The proverbial final straw on the camel’s back comes in the form of criminal charges towards theft of energy.
Given this backdrop, the only point that merits attention is the temerity of the issuers and their merchant bankers to affix a P/E demand of around 35 to what clearly ranks as one of the poorer IPOs in recent times.
Of course, that the promoters are dropping their post-IPO stake by almost half to below 50 may be purely co-incidental.
Or is it ?
Read between the lines.
MAX.ISSUE SIZE (Rs) : 26 crores
PRICE BAND (Rs) : 10 - 12
ISSUE OPENS/CLOSES : 28th November 2007 to 3rd December 2007
LISTING : BSE, NSE.
A mini-cement manufacturer, Burnpur Cement Limited (BCL) has limited presence across the eastern Indian states of Bihar, Jharkhand and West Bengal.
At a time, when demand for cement is burgeoning, this company’s capacity utilization stands at a pitiable 29 per cent. IPO funds are now being sought to set-up an integrated clinkerisation and cement grinding plant of 800 TPD capacity expandable to 1600 TPD.
The expansion plans, to say the least, appear highly ambitious given BCL’s uninspiring track record hitherto, Given the absence of any niche or critical mass, chances of BCL becoming an acquisition target is also minimized.
The overdependence on external suppliers for key production inputs is well reflected in operating margins that are barely 50 per cent of the industry average.
The financials, both past and estimated appear very modest. This coupled with the high percentage of debtors outstanding ( over 50 per cent of sales ) in a booming industry surely cannot enthuse investors.
The proverbial final straw on the camel’s back comes in the form of criminal charges towards theft of energy.
Given this backdrop, the only point that merits attention is the temerity of the issuers and their merchant bankers to affix a P/E demand of around 35 to what clearly ranks as one of the poorer IPOs in recent times.
Of course, that the promoters are dropping their post-IPO stake by almost half to below 50 may be purely co-incidental.
Or is it ?
Read between the lines.
