Business of Dynemic Products Ltd.
Dynemic Products was incorporated in 1990 and the company was promoted with
the objective of manufacturing the raw material required for food colour. The
company exports its products to 41 countries.
The company is offering its share at a price of Rs.35 per share and the offer
opens on January 18 and closes on January 25.
The funds from the proposed IPO
will be used for backward integration and replacing its gas boiler with a wood
or lignite boiler to reduce cost.
Financials
The revenues of the company have grown decently over the last few years and
now stand at Rs.27.75 crores. The company has not been as lucky with the profits
as they have been fluctuating over the past few years and now stand at just
over Rs.2 crores.
The debt burden has also been rising in the last few years and the secured loans
for the company stand at Rs.4.46 crores last fiscal. The EPS
has also been declining the last three years and from Rs.4.55 in 2003 it now
stands at Rs.2.97. If one includes the new shares that will float in the market
after the IPO the EPS is still further diluted to Rs.1.80 approximately.
The positive here however remains the fact that the company has been stable
in its profit making and has been profit making for the last 13 years.
Based on the above EPS the P/E
multiple for the share comes out to be around 19 times and the company has
certainly not been growing at a rate to justify this price.
Conclusion
The business has been sturdy and growing decently for over a decade but the
asking price of this IPO is simply not justified and it seems to be a case of
taking advantage of the general euphoria that exists in the market.
The following table shows the upcoming IPO that have been covered under this
section and their status. You can click on any of these to read more about them.
