Pradip Overseas IPO subscribed; should you invest?

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Pradip Overseas IPO subscribed; should you invest?

The initial public offering (IPO) of Pradip Overseas, a textile manufacturer with a niche focus on home linen products, has been subscribed 2.27 times so far, as per data available on the NSE website.

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The initial public offer (IPO) of Pradip Overseas, a textile manufacturer with a niche focus on home linen products, has been subscribed 2.27 times so far, as per data available on the NSE website.

The response from each category of investors was good after looking at their subscription figures. Non-institutional investors' reserved portion oversubscribed 7.09 times followed by retail and qualified institutional investors, which portion overbid two times and 1.27 times, respectively.

The 1.06 crore shares issue of Pradip will close on March 15. The company plans to raise up to Rs 117 crore through the issue and the price band is at Rs 100-110 a share.

Experts as well as brokerage houses have recommended investors to subscribe on the issue. Investment Advisor, SP Tulsian said issue was likely to reward the shareholders on listing as well as over six months period while Manish Bhatt of Prabhudas Lilladher says, one can apply Pradip for listing gains.

Tulsian said, "If we consider the upper band of Rs 110 per share, it is being issued at a PE multiple of less than 5 on historical earnings and at a PBV of less than 1.75 times. Based on FY11 earning estimates, PE works out to less than 4 and PBV at 1.15 times. Even post IPO, paid up equity of the company will remain quite low at Rs 40.37 crore, translating into an expected market capitalization of just Rs 450 crore."

"Alok Industries having a topline of less than Rs 4,000 crore with huge equity base of Rs. 605 crores is having a market cap of Rs 1,500 crore with core EV of Rs 4,000 crore. This is inspite of the fact that EPS is expected to be around Rs 4, thus giving a PE multiple of close to 6 times. Considering all this, issue is likely to reward the shareholders on listing as well as over 6 months period, even at the upper band of Rs. 110 per share. Go and apply," he said.