Face Value Rs 10
Price Band Rs 190-210
Keynote Capital has the following Opinion,
IPO of PG Electroplast Ltd. is priced at 12.52x on theFY11 earnings basis makes it expensive as compare to its only listed peer MIRC Electronics which trades at 9.84x on FY11 earnings basis. On the basis ofattractive ROE of 41%, investors may subscribe the issue.
Ajcon Global has the following Views,
At the upper band of the issue price, PG Electroplast is valued at 19x its FY11 Rs. 10.9/share (post issue). With due consideration to factors like major presence in CRT TVs segment (76.8% of total sales in FY11) which poses technology obsolete risk in the current advanced technological era, related party sales which accounted for 54.07% of sales in FY11 (top five customers includes three group companies), client concentration risk (top five customers accounted for 95% of sales in FY10, short term nature of contracts with its clients, low value addition in the products resulting in relatively low profit margins, expensive valuations as compared to peers and poor secondary market conditions, we believe the stock is valued at a premium and recommend investors to “AVOID” the issue.
SMC Analyst Sumit Kukreja says,
The company is present in a fast growing but highly competitive industry. The company operates on very thin margins and is dependent upon a few large customers and a single product category for a substantial portion of its total income. On a post-issue P/E multiple of 19.26 the issue seems to be aggressively priced and fully captures the future growth potential of the company.
HSBC asks investors to AVOID with the following note,
The OEMs like Mirc Electronics is available at a PE of 10.6x its FY11 earnings. South Korea listed OEM like Samsung is also trading at a PE of 9.3x. Hence, in our opinion, the offer is expensive considering the competition in the industry, growth prospects of PGEL and sustainable margin pressure on the company. We recommend our investors to avoid the issue.
