Experts/Company

Poll Result

Experts view

R S Iyer

(KR Choksey)

Varun Industries is a good company. People can apply for the issue though it is a fixed price issue. Looking at the product portfolio of the company (it is mainly in the business of export of stainless steel kitchenware and houseware items), there is no competitor.

Its EPS post issue is at Rs 9.82 and the PE stands at 6.11. Comparing with TTK Prestige to some extent, it still looks cheap. It is expected to list at around Rs 80.

Manish Bhatt

(Prabhudas Lilladher)

Apply

Varun Industries is an average issue. People can apply for the issue for listing gains.

SP Tulsian

(Investment Advisor)

Apply

The book value of the Varun Industries on 31-07-07 is Rs 83.50, EPS of Rs 14.90 for FY 07, likely EPS of close to Rs 20 for FY 08, and promoters subscribing to 24.30 lakh equity shares at the same price of Rs 60 per share. This has been a rare instance amongst the recent issues, where promoters are bringing in 27% of fund requirements at the same rate, as is being offered to the public.

The worrying factor for the company is huge working capital requirement, high debt equity ratio and high raw-material cost to the extent of 90%.

The company faces lot of competition from unorganized sector, which is a big threat. To counteract this, the company is also diversifying into iron ore and mining as also oil and gas drilling. Windmill power generation will also help, as the company plans to use power generated, for its stainless steel rolling mill at Jodhpur.

Though the company operates in a thin margin, yet the issue is at a 30% discount to its present book-value as also with respect to promoters post issue stake of 60%. Considering these facts, issue is fairly valued and hence investment can be made, if you have a medium term investment horizon.