Issue period September 19 – September 21, 2011
Price Band: Rs. 130 – Rs. 138
Issue Size: Rs. 60.00 crs
CARE IPO grading: 2/5 indicating below average fundamentals
SMC Capital has the following Reviews,
Considering the P/E valuation on the upper end of the price band of `138, the stock is priced at pre-issue P/E of 10.66x on its FY11 EPS of `12.95. Post issue, the stock discounts its FY11 earnings per share of `8.47 by 16.29x. On the lower end of the price band of `130, the stock is priced at pre-issue P/E of 10.04x on its FY11 EPS of `12.95. Post issue, the stock discounts its FY11 earnings per share of `8.47 by 15.35x.
The company is present in infrastructure space, which is currently going through difficult times due to factors like increased commodity prices, interest rate hikes, slowdown in order book built up due to general economic slowdown etc. The company's operations are concentrated in Maharashtra and are highly dependent upon tender-based government contracts for its revenues. The small scale of operations of the company and the rich valuations do not inspire any confidence either. There are bigger and better companies in the listed space available at lower valuation.
