Review + Recommendations Mandhana Industries

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Mandhana Industries has posted a 14% increase in the total income from operations to Rs 463.26 crore and a marginal 3% increase in the net profit to Rs 36.48 crore for the year ended March 2009. Net profit for the nine months ended December 2009 stood at Rs 28.56 crore, covering nearly 78% of the FY 2009 bottom line. The annualized EPS for the nine months on post is-sue equity of the company works out to Rs 11.5. At the offer price band of Rs 120- Rs 130 per share, PE works out to 10.4 – 11.3 times. Meanwhile, KPR Mills is trading at 10.3 times on annualized EPS for FY 2010 and that of Bombay Rayon quoting at 15.3 on nine-month EPS.

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Unicon Wealth Research Analyst Rahul Dholam asks investors to SUBSCRIBE to the IPO with the following note,

At the issue price of INR 120-130, the company is priced at 8.4-9.1x its FY10e EPS of INR 14.1 on a post issue basis. This is in line with its peers and looks quite attractive. Considering the strong industry growth and the integrated business model of the company, we would advise investors to subscribe to the issue.

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Nirmal Bang has the following Recommendation on the Public Issue,

Mandhana is available at a P/E multiple of 10.44x & 11.3x FY10E (9MFY10 annualized) at the lower and upper price band (Rs.120‐ 130 per share) respectively on post issue capital. The annualized EPS for the nine months on post issue equity of the company works out to Rs 11.50. If we compare Mandhana with its immediate peers like Bombay Rayon & Mudra Lifestyle, the stock is offered at discount to its peers. Thus, we recommend “SUBSCRIBE” rating with a long term outlook.