Avoid Tara Jewels IPO, says Hem Securities
Hem Securities has come out with its IPO Analysis on Tara Jewels. According to the research firm, the object of the offer for sale is to allow the selling shareholder to sell equity shares aggregating up to Rs. 700.00 million. The company will not receive any proceeds from the offer for sale. One can avoid the IPO, says Hem Securities.
November 21, 2012 / 18:03 IST
Hem Securities has come out with its IPO Analysis on Tara Jewels. According to the research firm, the object of the offer for sale is to allow the selling shareholder to sell equity shares aggregating up to Rs. 700.00 million. The company will not receive any proceeds from the offer for sale. One can avoid the IPO, says Hem Securities.
Objects of the Fresh Issue:(a) Meet the expenses of establishing Retail Stores: Company intend to expand its retail business by launching new stores in various parts of India. Accordingly, company proposes to deploy Rs. 664.80 million, from the Net Proceeds for establishing 20 stores ("Project Stores"). The 20 Project Stores will be launched in 18 cities, namely, Mumbai, New Delhi, Gurgaon, Noida, Lucknow, Allahabad, Kanpur, Varanasi, Jaipur, Udaipur, Kota, Mohali, Chandigarh, Amritsar, Ludhiana, Jalandhar, Raipur and Dehradun. All the Project Stores will be operated by company and the premises for the stores will be taken on lease or leave and license. The average size of a Project Store is proposed to be approximately 1,000 square feet.(b) Repayment or prepayment loans: Co’s business is working capital intensive and company avail majority of its working capital in the ordinary course of business under fund based and non-fund based facilities from various banks. Co propose to utilize part of the Net Proceeds to repay or prepay amounts outstanding under some of co’s fund based working capital facilities.Valuation: The company is bringing the issue at price band of Rs 225-230 per share at p/e multiple of 14.17-14.49 on post issue annualized eps of rs 15.87. The company with significant working capital requirement, seasonal business and high dependence on export sales is looking expensive at current level. Therefore we recommend investors to Avoid the issue.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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