The Indian markets are witnessing various IPOs of all sized – from small to large. In line with this trend is the launch of another IPO: the Garv Industries IPO.
The IPO came out on the 12th of April 2018 and plans to raise Rs. 3.2 crores. The issue is open until 17th April 2018. Minimum lot size for the retail investors is 10,000 shares issue at Rs 10 each.
Gaurav Industries IPO Details
|Issue Opens on||12th April 2018|
|Issue Closes on:.||17th April 2018|
|Issue Size||Rs.3.2 cr|
|Market Cap||Rs.10.20 cr|
|Listing at||BSE SME|
|Total Equity Shares Offered (Fresh)||32,00,000|
|Equity Shares Prior to the Issue||70,00,000|
|Equity Shares after the issue||1,02,00,000|
Garv Industries IPO Details
Garv Industries Ltd. (GIL) is a recently started company that has not completed a full fiscal year so far. It is a multiproduct trading and distribution company engaged in wide range of aluminum products and textile products.
To part finance its working capital and general capital fund needs, the company is coming out with a public issue of 32,00,000 equity shares of Rs. 10 each at par to mobilize Rs. 3.20 crore.
Post allotment, scrips will be listed on BSE SME.
The IPO is solely lead managed by Aryaman Financial Services Ltd. and Skyline Financial Services Pvt. Ltd. is the registrar to the issue.
The IPO will contribute 31.37 % of the post issue paid-up capital of Garv Industries.
Entire present equity of the company is issued at par. The average cost of acquisition of shares by the promoters is Rs. 10. Post issue its paid-up equity capital of Rs. 7.00 crore will stand increased to Rs. 10.20 crore.
Use of Funds: Garv Industries IPO
- Working Capital Requirements – INR2.59 crore
- Funding expenditure for General Corporate Purposes – INR0.18 crore
- Issue Expenses – INR0.43 crore
*The company has no operating history prior to October 2017.
Issue Date and Size:
|Listing on||BSE SME|
|Issue size (Rs cr)||3.20|
|Category Wise Subscription||Shares Offered|
|High Network Individuals||15,15,000|
Promoters Average Acquisition Cost:
|Name of the Promoter||No. of Shares held||Average Acquisition Cost (in Rs.)|
|Mr. Rishu Agarwal||1,000||10.00|
|Mrs. Daya Bansal||1,000||10.00|
|M/s R. S. Services Private Ltd||69,95,800||10.00|
Promoters Stake Pre & Post Issue:
|Shareholder Name||Pre Issue Stake (%)||Post Issue Stake|
|R S Services Private Ltd||99.94%||68.59%|
|Mr. Rishu Agarwal||0.01%||0.01%|
|Mrs. Daya Bansal||0.01%||0.01%|
|Promoter Group Entities||0.02%||0.02%|
Financial Performance of Garv Industries
On the performance front, for four months working ended on 31.01.18, it has earned a net profit of Rs. 0.11 crore on a turnover of Rs. 14.59 crore.
It has no past track record of financial data.
The issue is priced at a P/BV of 1.01 on the basis of its NAV of Rs. 9.91 as on 31.01.18 and at a Price/Book Value of 1.00 on the basis of post issue NAV of Rs. 9.93.
If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a Price/Earnings of around 161 against industry average P/E of 64 thus despite at par offer, it’s a costly bet. It has no listed peers to compare with.
On merchant banker’s front, this is the 33rd mandate from its stable in last four fiscals.
Out of last 10 listings, 4 opened at discount and the rest with a premium ranging from 1% to 2.5% on the day of listing. Thus, it has a poor track record.
Promoters of Garv Industries
The Promoters of the company are Mr. Rishu Agarwal, Mrs. Daya Bansal, and R S Services Private Limited (RSSPL).
RSSPL was incorporated in 1989 and the company was taken over by Mr. Rishu Agarwal and Mrs. Daya Bansal in the year 2010. The present Promoters and Promoter Group holds 100 % equity shares of this company.
RSSPL currently holds 69,95,800 Equity Shares of Garv Industries which constitutes 99.94% of the Pre-Issue paid up capital of the company.
IPO vs Mutual Funds
If you have no knowledge of the equity markets but are looking to gain from the equity markets, mutual funds are ideal. Investments can be made in Mutual Funds since they provide a wide variety and also the amount of investment can vary as per investor’s preference.
Many mutual funds invest in IPOs – many times at discounted rates that are not available to retail investors.
It is necessary to not get carried away by the hype surrounding IPOs. Don’t jump into IPO if you do not have the necessary skills.
In a mutual fund, a skilled and trained professional handles all investments for you and therefore, you can benefit from the equity markets without spending too much time gaining the skills needed to understand the markets.
- Large Cap Funds– Here the investment is made in large-cap companies. These companies have historically given returns between 12% and 18%. Moderate risk is involved and it is suggested to invest in these funds for more than 4 years.
- Mid Cap Funds–Here the investment is made in mid-cap companies. These companies have historically given returns between 15% and 20%. The risk is slightly more than large-cap funds. It is suggested to invest in these funds for more than 5 years.
- Small Cap Funds– Here the investment is made in small-cap companies. These companies offer 16-22% return. High risk is involved and it is suggested to invest in funds of this category for 6 years or more.
- Balanced Fund– This fund is a combination of equity and debt in its portfolio. Depending on the proportion of investment made in equity and debt, the risk and returns are accordingly determined. It is suggested to invest here for 2 to 3 years. Returns observed in this category of funds ranges from 11% to 14%.
Investment can be made via lump sum investment or through SIP (Systematic Investment Plan) mode in any of these funds.
Mutual Funds for 2018
Large Cap Fund:
These funds invest in large companies that have a history of good performance and stable balances.
Mid Cap Fund:
These are funds that are high risk – high return. They’re a bit riskier than large-cap funds.
Small Cap Fund:
These are the funds that you can invest in if you want very high growth. They are a very high risk too.
Disclaimer: the views expressed here are of the author and do not reflect those of Groww.