Asian Granito India, a manufacturer of vitrified tiles plans, is open for subscription with an IPO of 70 lakh equity share of Rs 10 each through a 100 per cent book building issue. The price band is at Rs 85-102 per equity share.
Moneycontrol conducted a poll on market experts to check whether to apply for the public issue or not. Experts said apply.
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Experts/Company
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Poll Result |
Experts view
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R S Iyer
(KR Choksey)
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Asian Granito is a good company, promoters' background also good. Compare with other tiles manufacturers like Kajaria (OPM - 13.62%, NPM - 1.85%), Nitco Tiles (OPM - 14.46%, NPM - 8.59%), Euro Ceramics (OPM - 35.8%, NPM - 16.1%) and Decolight (OPM - 23.3%, NPM - 10.88%), Asian Granito looks cheap at higher price band of Rs 102 as OPM at 23% and NPM 13.66%. The stock is expected to list at around Rs 150-160 as Euro Ceramics is trading at Rs 180.
Its R&D facility is very strong and it is leading player in vitrified tiles. Clients are Kalpataru, HPCL, Omaxe, HCC etc, so investors can subscribe with long term view.
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SP Tulsian
(Investment Advisor)
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The company commenced manufacturing of vitrified tiles with production of 4,000 sq. meters per day in October 03 and kept on increasing it over years, by three expansions, by 2006. These expansions resulted in a debt of Rs 63 crore in the books of the company resulting in a debt equity mix of almost 1 : 1. So now, this expansion and diversification is being carried out with public money.
Not bad, but in the process promoters’ stake would fall to 35% from 52.42%, and increasing equity base of the company to Rs 21.06 crore. The promoters’ stake would have been much lower, if, 40.61 lakh shares on 27-03-06 would not have been issued on merger of Asian Tiles Ltd. in swap ratio of 1 :1.
Euro Ceramics is now ruling at Rs 180 levels at a PER of about 11. Comparing the valuation of this company with Euro, it looks reasonable.
On expanded equity of Rs 21.06 crore, EPS based on FY 07 earning results in an EPS of Rs 10.92, giving a PER of less than 10, at the upper band. Expansion and new plant would improve performance from FY 09. Considering this, investment even at the upper band is recommended.
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The company plans to utilise the issue proceeds to set up a wall tile unit as well as for modernisation and expansion of its existing vitrified tile plant at a total investment of Rs 61.37 crore.
The new wall tile plant will have a manufacturing capacity of 9,300 sq m per day (50,000 tonnes a year).
The capacity will be increased from 14,000 sq m a day to 16,000 (1,34,300 tonnes a year).
Expansion is expected to be completed by September 2007 and the new wall tile plant will be commissioned by December 2007.
The issue, which comprises 33.24 per cent of the fully diluted post-issue paid-up capital of the company, closes on July 31.
Asian Granito’s subsidiary, Asian Tiles Ltd, is engaged in manufacturing ceramic floor tiles. It has a capacity of 7,000 sq m a day.
SBI Capital Markets Ltd and Enam Financial Consultants Pvt Ltd are the book running lead managers to the issue.
