Avoid Rushil Decor IPO: MLR Securities

The 56,43,750 equity shares IPO of Rushil Decor, a decorative laminated sheets manufacturer, opened for subscription. MLR Securities has recommended avoiding the issue, in its research report dated June 20.

Company has fixed price band at Rs 63-72 for the issue, which closes on June 23.

The report says, "At the average of the price band (Rs 67.5), the stock is valued at 11.8x annualized EPS of Rs 5.7 for 9 months ended December 2010. The capacity utilization in Laminate Sheet segment has been stagnant at around 75% for last four years, also the PP Board segment is operating at low capacity utilization rates. The company expects the MDF unit to be operational by October 2011, however the MDF unit is also likely to operate at low capacity utilization rates. Hence there is a significant threat to EPS post equity dilution."

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To read the full report click on the attachment

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