Experts/Company

Poll Result

Experts view

R S Iyer

(KR Choksey)

Apply

Cords Cable is a good issue. One can apply for this issue at Rs 125, a lower price of band. It will not create trouble for investors.

SP Tulsian

(Investment Advisor)

Don’t Apply

Cords Cable Industries is presently manufacturing Power Cables up to 1.1 KV and is in the process of expanding its capacity in two stages. The first expansion of Rs.13.20 crores would get completed by January 2008, while the second expansion of about Rs.65 crores is under implementation, for which, funds are being mobilized. Strangely, the existing capacity and capacity under expansion is not revealed anywhere by the company in its RHP. Instead, it has laid more emphasis on its existing land area of 45,000 sq. ft, which is being increased to 92,000 sq.ft. Is it a construction and realty Company or a cable manufacturing company?

There are many companies available in the secondary market which have better performances than that of Cords Cable and are ruling, at a PE multiple of 10 or less. For example, Torrent Cables having an equity base of Rs 7.50 crore with promoters stake of 63%, had a sales of Rs 200 crore for FY 07 with PAT of Rs 20 crore, resulting in an EPS of Rs 26. For 9 months ending 31-12-07, the sales was placed at Rs 160 crore with PAT of Rs 22.50 crore resulting into an EPS of Rs 30. Hence FY 08, EPS is likely to cross Rs 40. The share is now ruling at Rs 350, discounting it by less than 9 times.

This company is likely to post an EPS of close to Rs 10 for FY 08, on post IPO equity of Rs 11.43 crore, which results in a discounting of 13.5 times at the upper band. Hence, it is advised to give this IPO a pass as there are better options available in the secondary market.