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Avoid M&B Switchgears IPO: Hem Securities
The 50-lakh equity shares' IPO of Transformer manufacturer M&B Switchgears opened for subscription. Hem Securities has recommended investors to Avoid the issue.
The 50-lakh equity shares' IPO of Transformer manufacturer M&B Switchgears opened for subscription on September 28, 2011. Hem Securities has recommended investors to Avoid the issue.
The company plans to raise more than Rs 90 crore through the issue by diluting 25% post issue. It intends to use funds for setting up new grid connected 4 MWp solar photovoltaic power plant in Madhya Pradesh.
The company is hopeful of commencing generating power from this 4MW plant in March 2012.
Objects of Issue: 1. To set up co's new grid connected 4 MWp solar photovoltaic power plant at Village Gagorni,Distt. Rajghar, Madhya Pradesh; and 2. To meet General corporate purpose.
The company is bringing the issue at price band of Rs 180-186 which will convert into p/e multiple of more than 100 on post issue FY'11 EPS of Rs 0.39. The company with relatively small scale of operation as compare to its large peers is into high working capital intensive business . Co also has negative fund flow from operations over the last two years. Also company is looking very expensive at price band at which it is bringing the issue. Hence we recommend investors to Avoid the issue.
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