ICICI Direct has the following Recommendation on the IPO of Scotts Garments
At the price band of | 130-132, the IPO is priced at 14.5x-14.7x annualised 7MFY13 post issue diluted EPS. We believe the pricing is expensive and leaves no/little room for upside. In December 2012, SGL made a pre-IPO placement of 17.4 lakh shares to Emerging India Growth Fund CVCF V, at a price of | 115 (garnering ~ | 20 crore). We recommend AVOID.
Sushil Finance has the Following Views,
CARE has assigned a IPO Grade 3/5 to the IPO of Scotts Garments Limited. This grade indicates that the fundamentals of the Scotts Garments IPO are 'average' relative to the other listed equity securities in India. At the price band of Rs 130-132 and after annualizing net profit for seven months ended October 2012, the fully diluted price/earnings ratio works out to 14.5-14.7 times. Its larger and more profitable peers (PAT margins of over 7.5 per cent & revenues of Rs 1,000 crore and above) such as Bombay Rayons Fashion and Mandhana Industries trade at 11-17 times earnings. Even if one assumes a 20 per cent growth in FY14, the valuations are not cheap, leaving little room for appreciation.
