Avoid Gokul Refoils IPO : Arihant

Arihant capital markets has come out with a report on Gokul Refoils and Solvent's IPO. It has recommended investors to ignore the issue.

The issue has opened for subscription with its initial public offering (IPO) of  71.58 lakh equity shares of face value Rs 10 each. The issue will close on May 13, 2008. The price band has been fixed at Rs 175 to Rs 195 per equity share.

Arihant's report on Gokul Refoils and Solvent's IPO:

Gokul Refoils and Solvent Limited (GRSL), promoted by Balvantsinh Rajput, Kanubhai Thakkar, Mrs. Bhikiben Rajput and Mrs. Manjulaben Thakkar in 1982, is primarily engaged in the business of Refining Edible Oils including Seed Crushing and Solvent Extractions and Vanaspati Manufacturing along with Marketing of edible oils. The Company is a leading player with over 15 years of experience in the Edible oil industry with promoters’ experience of over 25 years. GRSL exports its goods to USA, European, South Asia and other countries apart from catering to the domestic market.

Valuation:

GRSL is engaged in the business of seed processing and solvent extraction, refining edible oils and vanaspati manufacturing. Based on the valuations, the issue looks to be reasonably priced at 8.06x and 8.98x on annualized 9Months FY 08 at lower and upper band. But keeping in mind the low margins business, highly working capital intensive & government regulated industry and high raw material cost we recommend our investors to ignore the issue.
 
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