The Indian primary market is back in action with big names lining up for public offers. CCD IPO just managed to cross the line via institutional investors, the retail and HNI category were in a cautious mood. Indigo IPO which opened on 27th Oct has already created a lot of furore with its hefty dividends to promoters, negative net worth and high pricing. S H Kelkar, largest domestic producer of fragrance is another name in the IPO bandwagon which opens for subscription on 28th to 30th Oct 2015.
The Rs 500 Crore SH Kelkar IPO has been priced in the range of Rs 173-180 and includes a fresh issue of shares worth Rs 210 crores which will flow into the company. The rest of the portion is an offer for sale by Private Equity Firm Blackstone Group and the promoters. The company is operational since 1922 as a manufacturer of Industrial Perfumes in British India and enjoys a 20% market share in the fragrance industry, according to a market research study.
Pros and Cons
The company has a well-diversified portfolio in the fragrance industry with its “Keva” and “Cobra” Brands. The client base is equally diversified with no client contributing 5% of its revenues. The company has been a big name in the Rs 4000 Crore fragrance industry and has been focusing on expansion in terms of client base (MNCs), geographical and technology strengthening.
On the contrary, company has a huge dependency in the FMCG Sector which is a cyclical industry. The company has a loan book of 180 crores and most part of this IPO will be deployed to retire the debt of the company and subsidiaries. The company is operating at an optimum capacity utilization and is unlikely to go for capex in the next few years. S H Kelkar also has no direct competitors in the Indian capital markets and thus has no benchmarks to gauge the valuations.
Social Media Outlook
I used various social media listening and analysis tools in an effort to capture social media vibes and overall sentiments around this IPO. The timeline chosen for the analysis was from 21st-Oct-15 to 27th-Oct-15.
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