NCML IPO Opens on December 29; Should You Invest?

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    NCML Industries is one of the leading edible oil importing, manufacturing and marketing Companies of India with international presence. NCML Industries plans to enter the capital markets by selling 60 lakh equity shares through its IPO.

    NCML IPO Opens on December 29; Should You Invest?

    Issue Detail:

    Issue Open: Dec 29, 2014 - Jan 2, 2015 
    Issue Type: 100% Book Built Issue IPO 
    Issue Size: 6,000,000 Equity Shares of Rs. 10 
    Issue Size: Rs. 60.00 - 72.00 Crore 
    Face Value: Rs. 10 Per Equity Share 
    Issue Price: Rs. 100 - Rs. 120 Per Equity Share


    Why you should avoid this company?

    • The company is having some internal risk associated with it such as
    • The company depends significantly on imports of raw materials in addition to domestic suppliers. 
    • Company has certain contingent liabilities which may adversely affect our financial position
    • There has been a conflict of Interest wherein our promoter company and our group companies
    • are involved in the same line of activity in which our company is involved.
    • The company has entered into number of related party transactions, which may involve conflict
    • of interest. 
    • Availability of inadequate labour, work stoppages and other labour problems could
    • adversely affect our business.
    • We do not have long-term contracts with suppliers and typically operate on the basis
    • of purchase orders.
    • The company has not paid any dividend in the past out of our earnings. 

    Valuations 

    On the valuations front the price may not be very steep considering that the weighted EPS for the last three years has been around Rs 23. This translates into a p/e of around 5-6 times of the price band of Rs 100-110. However, there are many risk factors which make investment in the company a slightly risky proposition.

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