Senco Gold IPO,Senco Gold IPO: Should I invest in a gold IPO? A decision should be taken this week – senco gold ipo opens should you subscribe to the issue
The initial open sale of shares of Senko Gold, a leading jewelery company in eastern India, started on Tuesday for subscription of shares. It will be available for bidding by investors till July 6.
Before this IPO, the company raised Rs. 121 crore has been raised. Nippon Mutual Fund, White Oak, Jupiter Asset Management, Bandhan Mutual Fund, 3P India Equity Fund among other investors participated in this. 3P India Equity Fund is owned by Prashant Jain.
The company is offering the shares at a price range of Rs 301-317 and investors can bid for a minimum of 47 shares in one phase. Many analysts have suggested investors to register this issue on strong financials and fair valuation.
“We kept a conservative valuation for this because we wanted to keep a buffer for investors to earn after the company’s stock is listed on the stock market. The market has been bullish in recent days. But our IPO pricing process has been completed in a year,” said Senko Gold’s Managing Director and Chief Executive Officer Suvankar Sen said.
Senko Gold is available at a P/E of 15.5 times its last financial year’s earnings at a price band above Rs 317. It is lower than the valuation of industry peers. Geojit Financial Services has rated the IPO with “Buy” recommendation.
Senko Gold Company has a network of 136 showrooms (75 company owned and 61 franchise) in 96 cities across 13 states/UTs. However, 63% of the company’s showrooms are located in West Bengal.
Apart from selling gold and diamonds, the company also offers a wide selection of jewelery made from silver, platinum, precious and semi-precious metals and various other metals. Its topline and bottomline have grown at a three-year pace of 19% and 20% respectively.
“With a strong brand name and a legacy of over five decades, company-operated showrooms and an established asset ‘franchise’ model, the company is expected to benefit”, Geojit said in the report.
According to Reliance Securities, while the company’s financial position has improved over the past 2 years, its high concentration in the eastern region has posed challenges. The company said the growth in the market presents an opportunity for the company to expand.
“The company has demonstrated the best financial performance among competitors. Hence based on current performance we recommend the stock for listed gain. Sanco Gold trades at a higher price band at a P/E multiple of 13.9 times – which is lower than the peer average”, the brokerage firm said.
SBI Securities believes that the company’s strong legacy in the jewelery business allows it to tap into market growth in other parts of the country.
The total value of the new equity issue is Rs. 270 crore and the OFS category is valued at a total of Rs. 135 crores.
196 crore of the net proceeds of the fresh issue will be for working capital fund and other general business purposes. 50% of the net available shares are reserved for accredited institutional investors and 35% for retail investors.
The net proceeds from this process will be to fund the company’s working capital requirement and other general purposes.
IIFL Securities, Ambit and SBI Capital Markets are the managers for the issue. While Caffeine Technologies is the registrar.
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