Tirupati Inks is a micro cap company which has come out with a Follow on Offering (FPO) of Rs 50 crores ( $11 million) out of which around $2.2 million will be contributed by the promoters.The promoter stake will fall to around 20-25% from the 44% at present.Most of the money that will be raised will be used to set up a speciality ink factory for which around $2 million has been already spent.Note the public holding will go upto\u00a0 65% post this issue which is a significant portion.A small company Aashika is managing the issue.Tirupati Inks is listed in one of India’s defunct stock exchanges the Delhi Stock Exchange.<\/p>\n
The company will have a market cap of around Rs 65 crores or $14.5 million post the issue.The valuation of the company seems quite rich at around 30x trailing earnings.The company is a bit player in a bit market with negative operating cash flows the last 2 years.It easily places itself in the Junk Category of primary market issues<\/a> which have hit the Indian markets in the last few months.Despite its sorry fundamentals don’t be surprised if you see the stock going up 100% on the day of the listing .Recent junk companies like Aster Silicates,Prakash Steelage are being brazenly manipulated<\/a> without any repurcussions.Here is a few points about this company from the DHRP.<\/p>\n 1) Company has grown topline a lot as it is heavily involved in trading of polyester film.Its core ink business acounted for only 30% of its total revenue in last fiscal quarter.Bottom line on the other hand remains subdued as the ink business is a low margin business.5% Net Margin is typical for this sector making it risky to invest in small players.<\/p>\n 2) Its GM is 15% and Net Margin is around 5%.Its total marketshare is miniscule in the Ink Market which is dominated by MNC’s like Microink and DCI.Even these companies trade at 15x P\/E making the 30x P\/E exhorbitant.Basically the investors in the issue will fund the whole company\u00a0 as the company only has a net worth of Rs 6.8 crores or $1.4 million<\/p>\n 3) Heavily indebted with around $4.2 millin in debt paying around 13% in Interest. In case the ink expansion does not work out expect your money to go down the drain.<\/p>\n Summary<\/strong><\/p>\n Why would anyone want to invest in such a sorry stock is beyond me but I have seen even worse companies list so don’t get surprised.The company is basically is using all the investor’s money to become a decent business.Its current business with less than $1 million in fixed assets and $500k in profits is not worth putting money into.So if you are a super high risky investor then this stock would make sense for you.<\/p>\n","protected":false},"excerpt":{"rendered":" Why would anyone want to invest in such a sorry stock is beyond me but I have seen even worse companies list so don’t get surprised.The company is basically is using all the investor’s money to become a decent business.Its current business with less than $1 million in fixed assets and $500k in profits is not worth putting money into.So if you are a super high risky investor then this stock would make sense for you.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","content-type":"","footnotes":""},"categories":[32],"tags":[1373,3157,3267,4317,5264],"class_list":["post-1949","post","type-post","status-publish","format-standard","hentry","category-ipo-indian-capital-markets","tag-debt","tag-ipo-indian-capital-markets","tag-junk","tag-regulator","tag-stock-market"],"_links":{"self":[{"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/posts\/1949","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/comments?post=1949"}],"version-history":[{"count":0,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/posts\/1949\/revisions"}],"wp:attachment":[{"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/media?parent=1949"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/categories?post=1949"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/iiec-india.org\/greenworld\/wp-json\/wp\/v2\/tags?post=1949"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}