High priced Syncom Healthcare's IPO offers little to a retail investor
Indore-based Syncom Healthcare is a small-sized pharma company engaged in the manufacture and sale of drug formulations and also undertakes contract manufacturing. It proposes an initial public offer of a fresh issue of 75 lakh shares to raise Rs 48.7 to Rs 56.2 crore. From the proceeds of the issue, Rs 20.5 crore is to be used for setting up a new manufacturing unit in Indore SEZ, Rs 6 crore to carry out modernization of the company's existing facility at Dehradun, Rs 15 crore towards meeting working capital requirements and the balance for administrative and general corporate expenses. The current public offer represents around 43% of the total post-issue share capital of the company. The company is raising funds to the extent of 80% of its annual turnover of over Rs 60 crore. Despite its diminutive size and short history of good track record, the company is being valued quite high at 19 to 20 times of its estimated full year earnings of FY10. Given the small scale of operations, its financial numbers also don't seem to be very credible for a retail investor to park funds with a long-term view. Investors are advised to avoid subscribing to this issue.
Price Band: Rs 65-75
Net issue size: Rs 49-56 crore
Date: January 27 - 29
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