27th April 2011, 03:49 PM
|
|
Sachin Asher
|
|
Join Date: Sep 2006
Location: Vadodara
Posts: 8,632
Rep Power: 383
|
|
Servalakshmi Paper IPO
I will be skipping this one too.
This company has just started production and hasn't even completed one year of production.
It is difficult to say how well the business will do in next 1-2 years.
Even if everything goes as planned, I don't think there will be any upside for IPO investors.
If the company is able to achieve 80%-90% capacity utilization in the next 2 years, the post-IPO eps still will be somewhere between 3 and 3.5.
(I assumed 300 crore of annual revenue with 20% operating margin).
The company has a lot of debt - nearly 300 crore. If things don't go as planned, interest costs will really hurt the company.
Considering the risks involved, I feel the IPO is over-priced.
Assuming the IPO goes though, I think the fair value of the stock between 15 and 20.
|
.
Linear Mode
