2021-12-11 07:21:20
*Alert For Latest Ipo*
*Highly Overvalued Risky Ipo*
*( Even Don't Invest After Listing For Long Term )*
*Why SEBI Give Permission For A Such Overvalued Ipo We Request Sebi To Investigate Against High Qip Portion Ipo And Also On Merchant Banker*
*Very poor fundamentals of HP Adhesives.*
Few points highlighted for HP Adhesives Limited
1) Erratic fundamentals – Not proper P/L accounts
2) Extremely HIGH PE
3) Comparison with 4 decade old Market leader
4) Promoter status
It seems that HP Adhesives is trying to compare against Pidilite Limited which is more than 4 decade old company. Pidilite sales for March 2021 are Rs 7,293 crore while HP Adhesives Sales are Rs 124 crore. Less than 2 percent of Sales. Pidilite Net profit are Rs 1,131 Crore while that of HP Adhesives are Rs 10 crore for March 2021. Less than 0.89 percent. How can you compare yourself against such a large.
Secondly HP Adhesives wants to raise Rs 125 crore from the the sales of Rs 274 per share aggregating to Rs 125 crore. As per the RHP, the EPS highlighted is Rs 7.7…. at the price of Rs 274, the PE works to 36 as per March 2021 numbers. However, as per September 2021 numbers, the 6 month ESP is just Rs 3 which if we double it for the full year wil work to Rs 6. So on 274 , the PE works to 46. Are we ready to pay such a high PE for a company which post just 3-4 crore profits.
Thirdly, the erractic fundamentals of the HP Adhesives. For March 2019, the company posted a profit of meagre Rs 4 crore on Sales of Rs 88 crores. For March 2020, the company posted a LOSS of Rs 4.67 crore (before even Covid hit the market) on a sales of Rs 98 crore. Then when it decided to raise the capital from the IPO market, it post a HUGE profit of Rs 10 crore on a sales of Rs 124 crore. In order to tap the IPO markets, the number seem to be fudged. Also again for the current quarter of September 2021 the net profits are down to just 3.1 crore against a sales of Rs 73 crore. Clearly the P/L is managed to look good for the IPO.
Of the money raised, there is an OFS of 4,57,200 at Rs 274 aggregating Rs 12.5 crore taken by the promoters.
Also from the raised Rs 125 crore, Rs 48.50 crore are for general purposes. Now we all know that this general purpose is nothing but money taken for personal use. Also the key promoters are 36 year old along with his mother.
In totality, the IPO seems to have been managed with it opening in Trade to Trade category along with a relative small issue. Such fly by night operators are very common in rosy markets. Kindly go through the fundamentals before investing
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