Most analysts from various brokerage houses have portrayed an optimistic view upon the INR5.08 billion initial public offer (IPO) of India’s fragrance and flavor maker S H Kelkar. The offer shall conclude on 30 October and is priced in the range of INR173-180 per share with fresh issue (INR2.1 billion) and an offer for sale (16.56 million shares). The issue concurs with the ongoing InterGlobe Aviation IPO.
The company is promoted by Ramesh Vinayak Vaze, Prabha Ramesh Vaze and Kedar Ramesh Vaze. Private equity firm Blackstone and promoter Prabha Ramesh Vaze are among the selling shareholders. The proceeds from the issue will be used for repayment and pre-payment of loans, investment in subsidiary and repayment of loans availed by it and for general corporate purpose.
Read Also: SH Kelkar IPO Review – The Scent of Money
Issue details are as follows:
| IPO dates | 28-30 October 2015 |
| Price Band | INR173-180 per share |
| Issue Size | INR4.96 – 5.08 billion |
| Fresh Issue | INR2.1 billion |
| Offer for Sale | 16,565,161 shares |
| Minimum Bid | 80 shares |
| Lead Managers | JM Financial Institutional Securities Limited and Kotak Mahindra Capital Company Limited. |
Analysts at Hem Securities advise the investors to SUBSCRIBE to the S H Kelkar issue stating its established market leadership and brand name with a comprehensive product offering and diverse customer base as points to consider. The company has strong R&D skills along with long standing relationships with suppliers. 90 year-old S H Kelkar is one of the largest fragrance and flavor companies in India by revenue providing full supplier service with over 9,700 fragrance, ingredients and flavor products. With the issue at price band of INR173-180 per share that will convert into p/e multiple of 30-31.5 on post issue annualized EPS of INR5.71.
Read Also: InterGlobe Aviation IPO Review: The emperor has no clothes
EliteWealth recommends investors to take note on the performance front. The company has diluted EPS of INR4.84 year ended March 2015. Though the asking price the PE works out to be 37x seems to be pricey but there are no listed companies with similar business in India. Hence, investors are recommended to SUBSCRIBE FOR LONG TERM INVESTMENT.
Aditya Birla Money has also gone with the flow and is optimistic about long term investments. The brokerage house has taken into consideration the strong entry barriers of this industry due to regulatory environment, increase in consumer demand for new and improved products, quality consistency and price uncertainty of key inputs. S H Kelkar is well placed and has an upper hand regarding this. Their diverse product range makes to lower concentration risk of products as well as clients. The company serves diverse customers including companies like Godrej Consumer, HUL, Marico, Vini Cosmetics, Wipro, ITC etc. Gross sales rose from INR7099.2 million to INR8094.4 million and INR8852.3 million in FY 2013, FY2014 and FY2015 respectively. With the proceeds going towards repaying total debts, the company would become debt free entity and it will help in strong cash flow generation. Aditya Birla Money wants investors to consider for SUBSCRIBE FOR LONG TERM INVESTMENT.
