14 Date : 22.04-2013 to 28.04-2013Date : 22.04-2013 to 28.04-2013Date : 22.04-2013 to 28.04-2013Date : 22.04-2013 to 28.04-2013Date : 22.04-2013 to 28.04-2013THETHETHETHETHETHETHETHETHETHE

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THE ECONOMIC REVOLUTIONTHE ECONOMIC REVOLUTIONTHE ECONOMIC REVOLUTIONTHE ECONOMIC REVOLUTIONTHE ECONOMIC REVOLUTION

IPO &Biz Brief:By Dilip Davda

Email:dilip_davda@rediffmail.com

Veteran stock market analyst contributing to printand electronic media since 1985 and visiting stock

analyst on DD News - Mumbai.

SCOTTS GARMENTS LTDIPO OPENS ON 25.04.13

IT IS BETTER TO BUY AT DIS-COUNT POST LISTING.

ASKING HIGHER PRICE FOR IPOAGAINST PRE-IPO PLACEMENT

PRICE IS NOT JUSTIFIED. AL-THOUGH GARMENT INDUSTRY ISPOISED FOR BRIGHT PROSPECTSAHEAD AS PER RECENT BUDGET,

CONSIDERING LISTING IN "T"GROUP FOR INITIAL PERIOD, ITIS BETTER TO BUY AT DISCOUNT

POST LISTING.

After the news ofSEBI clearance for IPOof Just Dial, primarymarket operators wereeagerly waiting for theofficial announcementand pricing details of thesaid IPO, but with a great

surprise to all, we havethe announcement fromScotts Garments Ltd, thatis taking the onus of be-

ing the first main lineIPO for the fiscal 2013-14. Details of the ScottsGarment IPO are as un-der:

Scotts Garments Ltd.(SGL) is a garmentmanufacturing companyin India having state ofthe art facilities formanufacturing of highquality fashion garmentsmainly for global mar-kets. Its facility is fullybacked by product devel-opment, design studio,and efficient sampling in-frastructure supported byfacilities like embroi-dery, printing, dyeing andwashing. Its list of inter-national clients includes

Best Seller-Denmark, OldNavy, H & M -USA, C &A Buying –Germany, VilaA/s- Denmark, RhodiSuppliers – UK etc. Itsmanufacturing capacityas on 31.03.12 was217.08 lakh pieces per

month and has windmillpower generation capaci-ties of 4.05 MW in south-

ern region. For last threefiscals its exports contrib-uted above 91% in the to-tal turnover.

The company is nowplanning to set up Trou-ser manufacturing unit atDoddabalapaur inKarnataka and Knittingand Fabric Processingunit at Kolhapur inMaharashtra. To part fi-nance this along with rais-ing general corpus fundand working capital, it isoffering 10506954 equityshare of Rs. 10 each viabook building processand fixed a price band ofRs. 130-132 to mobilizearound Rs. 136 crore.Company has reserved

450000 equity shares forits employees and hasalso made pre-IPOplacement of 1739130equity share at a price ofRs. 115 per share on26.12.12. It issued bonusin the ratio of 12 for 1

on 28.03.2006 and dur-ing 2007-2009 issuedequity shares in different

price bands rang-ing between Rs.20 to Rs. 80 pershare.

Issue opensfor subscriptionon 25.04.13 andwill close on29.04.13. Mini-mum applicationis to be made for100 shares and inmultiples thereofthereafter. Shareswill be listed onBSE and NSEpost allotments.

BRLM to the issue areKeynote Corporate Ser-vices Ltd. and CanaraBank. Link Intime Indiais the registrar to the is-sue. CARE has assignedIPO Grade 3 to this IPOindicating at averagefundamentals of thecompany.

For the fiscals 2010-2011 and 2012 respec-tively the company re-ported total turnover ofRs. 434.36 crore, 503.75crore and 566.13 crore(including other incomeof Rs. 4.19 crore, 8.47crore and 65.88 crore)with a net profit of Rs.27.84 crore, Rs. 34.93crore and Rs. 84.03

crore. Thus fiscal 2012witnessed quantumjumps with higher otherincome. For the firstseven months ended31.10.12 it has postedturnover of Rs. 335.33crore with a net profit ofRs. 20.41 crore. If we at-tribute this earning on an-nualized basis on postIPO Company’s equity ofRs. 38.98 crore then theasking price is at a P/E ofaround 14.5 and at a P/BV of 1.4 plus consider-ing its NAV of Rs. 90.98.Thus is appears to be ag-gressively priced againstits peers that are tradingat a P/E of 10 to 16.

On BRLM’s perfor-mance front, KeynoteCorporate had mandatefor 17 IPOs out of which8 failed to give listing daygains. For Canara Bankthis is perhaps first man-date after very long.

Remarks: Askinghigher price for IPOagainst pre-IPO place-ment price is not justi-fied. Although garmentindustry is poised forbright prospects aheadas per recent budget,considering listing in “T“group for initial pe-riod, it is better to buyat discount post listing.

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WONDERLA HOLIDAYSFILES DRHP WITH SEBIWonderla Holidays Lim-ited has filed a DRHPwith SEBI for an initialpublic offering of14,500,000 equity sharesof face value of Rs. 10each for cash at a priceto be decided through a100% book-buildingprocess. The Issue wouldconstitute 25.66% of thefully diluted post Issuepaid up equity sharecapital of the Company.The Equity Shares of-fered in the Issue are pro-posed to be listed on theBSE and NSE. The BookRunning Lead Managersto the Issue are Edel-

weiss Financial ServicesLimited and ICICI Secu-rities Limited. The Com-pany currently owns andoperates two amusementparks under the brandname ‘Wonderla’, situ-ated at Kochi and Banga-lore. It also owns andoperates a resort besidethe amusement park inBangalore under thebrand name ‘WonderlaResort’. The Company isin the process of settingup their third amusementpark in Hyderabad, andthe Issue proceeds willprimarily be utilized to-wards this purpose.

SOME MAY CLAIM IT IS AWORTHY BET, BUT CON-SIDERING THE PRE-IPO

PLACEMENT PRICE,THE CURRENT IPO PRICEIS TOTALLY UNJUSTIFIEDIN PRESENT SCENARIO OF

SUBDUED SECONDRYMARKET, IT'S GRADING 3/5 ALSO INDICATES "AVER-AGE" FUNDAMENTALS SO

IT IS BETTER TO BUY ATDISCOUNT

POST LISTING.