Globus Spirits could give 20% return on listing: SP Tulsian
Published on Wed, Sep 02, 2009 at 21:33 | Source : CNBC-TV18
Updated at Wed, Sep 02, 2009 at 17:25
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Globus Spirits could give 20% return on listing: SP Tulsian
Globus Spirits closes its IPO of 75 lakh equity shares of Rs 10 each today. It will raise around Rs 67.5-75 crore in the price band of Rs 90-100 a share. Investment Advisor, SP Tulsian said considering the track record, the financial performance and the average PE multiple given to the peers in the industry, this issue did not look expensive.
Q: Can you just elaborate a little bit on that? What are the comparisons you're making? What is the PE in this case?
A: If I go by the recent one - in the last one year Empee Distilleries went public and we have seen this new interest coming in the stock. But they are Rs 750 crore to Rs 1,000 crore company whereas this is Rs 300-500 crore company. Then in other companies you have Radico Khaitan, United Breweries who have a PE multiple of close to 30 plus while Empee Distilleries has a PE multiple of close to 15. So if I go by the current year's performance of FY10 on an expected EPS of 20 the discounting comes to at about 5. So that leaves sufficient room for appreciation for the prospective investor.
Money is money. You're saying upper band Rs 100. Give us a probability - what are the chances this issue is going to open below Rs 100 because most of us outside are playing for the pop - we don't really look at companies especially alcohol companies doing well after six-years, we just want to know if the IPO is going to be good, will I make money out of it? What do you think are the chances I will actually make something positive at listing?
A: Again if I just want to speculate on that I expect that it to give return of at least 20%. But it is very difficult because it all depends on the risk being received by the issue and the distribution pattern. Even if you want me to make a guess on that it could be about 20% on listing.
