Sudar Garments Limited is engaged in the manufacturing of garments for Men’s wear, Women’s wear and Kids wear. The company is coming out with an IPO on 21st February 2011 which closes on 24th February 2011. The Price Band has been fixed at Rs 72 to Rs 77.
At the upper price band of Rs 77, the company shall be trading at around 18x its FY 11 annualized EPS which seems expensive and is at a premium to most listed peers like Kewal Kiran, Bang Overseas e.t.c.. The other challenges of the company remain in the form of future Sales generation as it is heavily dependent on few key clients (approximately 98% of the revenues come from 6 customers) which also hinder its ability to withstand any pricing pressure. Crisil has assigned grade 1 to the IPO indicating poor fundamentals. We recommend an AVOID on the Public Issue.
No comments:
Post a Comment