Shri Ram Switchgears Limited is coming up with their initial public offering and that issue is going to hit the NSE SME exchange on 25th May. I will discuss the Shri Ram Switchgears Limited IPO review and will find out if we have good chance of making money in this issue OR not.
Issue Date: May 25, 2017 – May 30, 2017
Offer Price: Rs. 19 per equity share
Minimum Application: 6000 shares
Listing Exchange: NSE SME
1) Working capital requirements.
2) Issue expenses.
Shri Shiv Kumar Jhalani started Shri Ram Switchgears Limited on 1985 and it is based at Ratlam in MP. They are manufacturers of electrical instruments like transformers, feeder pillars and electrical distribution boxes. They are carrying on operations in MP, Gujarat, Rajasthan and UP.
The promoters of the company are Shri Nilesh Kumar Jhalani and Shri Rohit Kumar Jhalani. The clientele includes Madhya Paschim Kshetra Vidyut Vitaran Company Ltd, BSES, Torrent Power, Tata Power, Reliance Energy, BHEL, Godrej & Boyce etc. But out of that Madhya Paschim Kshetra Vidyut Vitaran Company Ltd gives them the major business over 70%.
The financial data shows that the company has not done well in 2016 both in turnover as well as profitability. This can be due to less projects in hand on that year as well as not managing the bottom line effectively.
Shri Ram Switchgears Limited IPO Review: The company has historically good track record and its an established company running for more than 30 years now. On the other hand dependence on single client adds to the negative side. The promoters are not divesting their stake through this IPO but their average cost for their shares are between Rs. 3 to Rs. 6. So issue price for public is close to 3-6 times of promoter’s share price. Considering the 3 decade long established business we recommend that only cash rich investors can apply in this issue for medium to long term.