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Polycab IPO Subscribe?

Discussion in 'Fundamental Analysis' started by manishdeolalkar, Apr 5, 2019.

  1. manishdeolalkar

    manishdeolalkar Member

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    Looking at the unique product line and brand value, any suggestions on IPO, subscribe?

    Consolidated few data points from other sources, I haven't looked at it personally.
    Shabbir Bhai, ur take on it?

    †***********†***************
    IPO WATCH: Analysts Positive on Polycab: ET

    CHEAPER VALUATIONS as compared to peers, strong brand profile and financials make the issue attractive for investors, they say

    Most analysts are bullish on Polycab India’s initial public offer (IPO), citing cheaper valuation and strong growth profile with high level of backward integration, strong distribution network, leadership in wires and cables with wide range of product portfolio. Polycab India’s offer is priced in a ₹533-538 range, will open on April 5 and close on April 9.


    At the upper price band, Polycab is valued at a PE multiple of 21.6 times its FY18 earnings, which is lower than its peers like KEI Industries, Havells India, Bajaj Electricals and Crompton Greaves Consumer.

    “Given the brand position, financials and business prospects, we suggest investors can subscribe to the issue,” said an analyst. “Being a leading player with a strong brand portfolio and distribution network could bode well for Polycab’s new product launches and expansion of FMEG business. In addition, government initiatives in electrification, housing for all and better prospects in the electrical goods may be added triggers for business growth.”

    Polycab has a strong growth profile with revenue, operating profit and net profit reporting a CAGR of 10%, 23% and 42%, respectively, during FY16-18. Further, it has low net debt/ equity of 0.2 as on December 2019.

    “At the upper price band, Polycab is valued much lower than the industry average,” said another analyst. “Polycab has wide distribution network across India which enables faster roll out of new products and gives them a competitive advantage.”

    Post the IPO, the promoter shareholding will fall to 68.7% from 78.9%. At the upper price band, company’s market capitalisation stands at ₹8,000 crore. Return on equity (RoE) stood at17% in FY18 and return on capital employed (RoCE) at 14%.

    For the nine months ended December 2018, revenue of the company grew 17% to ₹5,561 crore. During this period, net profit doubled to ₹360 crore. The EBITDA margin was 13.37% while PAT margin was 6.44%.

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    manishdeolalkar, Apr 5, 2019
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  2. shabbir

    shabbir Administrator Staff Member

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    Comparison to peers valuation looks cheap and so should be considered.

    I have given up on IPO because of the low allocation and the manner in which it is allocated which is random.
     
    shabbir, Apr 5, 2019
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  3. nirajshah

    nirajshah Champion

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    nirajshah, Apr 10, 2019
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  4. manishdeolalkar

    manishdeolalkar Member

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    Me
     
    manishdeolalkar, Apr 10, 2019
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  5. chaitanya_mella

    chaitanya_mella Contributor

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    chaitanya_mella, Apr 10, 2019
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  6. chaitanya_mella

    chaitanya_mella Contributor

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    I got one lot out of 7. How about other members
     
    chaitanya_mella, Apr 15, 2019
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  7. nirajshah

    nirajshah Champion

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    nirajshah, Apr 15, 2019
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  8. chaitanya_mella

    chaitanya_mella Contributor

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    chaitanya_mella, Apr 15, 2019
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  9. shabbir

    shabbir Administrator Staff Member

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    Thats the reason I generally tend to avoid IPOs. Allocation is too low to get excited about.
     
    shabbir, Apr 15, 2019
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  10. chaitanya_mella

    chaitanya_mella Contributor

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    True. I don’t see a point holding on to just 27 too.


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    chaitanya_mella, Apr 15, 2019
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  11. nirajshah

    nirajshah Champion

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    nirajshah, Apr 20, 2019
    Share #11
  12. chaitanya_mella

    chaitanya_mella Contributor

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    chaitanya_mella, Apr 20, 2019
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  13. nirajshah

    nirajshah Champion

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    nirajshah, Apr 24, 2019
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