Shankara Building Products IPO

This post on Shankara Building Products IPO tries to bring out consolidated brokerage views opinions, IPO Review / Analysis, Note/ reports and recommendation of brokerages , Analyst, Business New papers, Management views, information on Anchor investors, Subscription etc on Shankara Building Products IPO and shall be updated continuously till the closure of the issue The information collated from various sources and reports in public domain can  help investors to decide whether they should subscribe to Shankara Building Products IPO.
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Shankara Building Products IPO Review

Shankara Building Products IPO allotment is out Check here


Shankara Building Products IPO :  Grey Market Premium etc. 

24/03/17

Subscription Retail Application wise- 13.0 x

Grey Market Premium:  Rs. 120+

23/03/17

Grey Market Premium reported: Rs 150/-  approx

Kostak (Application Form rate); Rs. 450/- approx<b/p>

Estimated Subscription Retail : 10-12 times.

Shankara Building Products IPO : Subscription etc.  
Subscription: Shankara Building Products  IPO  ( x times)
 QIBNIIRetailTotal
Day 3(approx)53.2991.2215.4442.24x
Day 2 .0.75 0.49 4.352.49
Day 10.000.0960.98x0.51

List of Anchor Investors

Shankara Building raises Rs 104 cr from total of 16 anchor investors. Anchor investors include Frankling India Smaller Companies Fund, DSP BlackRock Core Fund, ICICI Prudential Life Insurance Company and Reliance Nippon Life Insurance Company Ltd.
Click here for Anchor Investors of Shankara Building Products IPO

Consolidated Views of Brokerages, Analysts, Business New Paper Reports, Management Views on Shankara Building Products  IPO.
  • SMC Global: “Subscribe: Considering the P/E valuation on the upper end of the price band of Rs. 460, the stock is priced at pre issue P/E of 18.16x on its FY17 EPS of Rs. 25.33. Post issue, the stock is priced at a P/E of 18.97x on its EPS of Rs. 24.24. Looking at the P/B ratio at Rs. 460 the stock is priced at P/B ratio of 3.03x on the pre issue book value of Rs.151.87 and on the post issue book value of Rs. 171.12 the P/B comes out to 2.69x.On the lower end of the price band of Rs.440 the stock is priced at pre issue P/E of 17.37x on its FY17 EPS of Rs. 25.33.Post issue, the stock is priced at a P/E of 18.15 on its EPS of Rs. 24.24. Looking at the P/B ratio at Rs. 440, the stock is priced at P/B ratio of 2.90x on the pre issue book value of Rs. 151.87 and on the post issue book value of Rs. 171.12 , the P/B comes out to 2.57x.”
  • ICICI Direct: “SBPL’s share of revenues from the higher margin retail segment has increased from 24% in FY14 to 42% in 9MFY17 primarily due to healthy store expansion. Higher contribution from the retail segment has led to increase in blended EBITDA margins from 4.6% in FY14 to 6.4% in 9MFY17. Going forward, the company plans to further increase its focus on retail segment, auguring well. On a consolidated basis, at the upper end of price band Rs. 460, P/E multiple (pre issue) works out to ~24.3x of FY16 numbers. We recommend that investors SUBSCRIBE to the issue. “
  • Centrum Wealth Research: ” Has a ‘neutral’ rating on the issue as valuations at 19 times on 9MFY17 annualised basis appears to be mature, given the current set of financials (Ebitda margins of 6 per cent and RoE of 15 per cent). Further, 87 per cent of the issue is offer for sale and the issue proceeds will not come into the company. However, SBPL is currently amidst a business mix change (with focus on retail) which could result in improvement in financials”.
  • Business Standard: “in recent years, the company has been focusing on ramping up its presence in the higher-margin retail segment — which accounts for 42 per cent of revenues currently. This has also helped margins, which should rise further as the share of the retail business increases. Considering reasonable valuations and healthy growth prospects, long-term investors can subscribe to the issue.”  Full Article 
  • Nirmal Bang: “Over FY13- FY16 the revenues of SBPL have grown at a CAGR of 4.8% however, growth in the retail segment was 28% CAGR. EBIT in the retail segment has grow at 99% CAGR over 2013-2016 with EBIT margin increasing from 1% in FY13 to 6.3% in FY16 and 7.1% for the nine month ended December 2016 as compared to consolidated EBIT margin of 4.7% in FY13 to 5.5% in FY16 and 5.9% for 9 month ended December 2016. According to the management, SBPL plans to focus more on the retail segment to drive growth and stabilize the revenue growth in enterprise and channel segment. SBPL has reported healthy RoCE and RoE at 28.2% and 14.2% for FY16 despite aggressive expansion in the retail segment. We expect SBPL to report healthy numbers for FY17 and FY18. On the valuation front, at the upper end of the price band of Rs 460, as per our estimates, SBPL is offered at PE of 18x its FY17E EPS of Rs 25 and 15x its FY18 EPS of 31. We recommend subscribing to the issue.”
  • IndiaNivesh: “Given the (1) low entry barriers for the business, (2) limited diversification of Shankara as a Retail player in the Building Material space, (3) our higher risk perception towards the execution, going forward, (4) premium valuations to Pipe & Tube manufacturers, which have better growth prospects (with minimal execution challenges), we advise investors to AVOID the Shankara Building Products IPO. “
  • SSJ Finance:”Shankara Building Products Limited has reported a CAGR of 9.5% and 8.4% on the revenue and net profit fronts respectively over FY2012-2016. On its upper band of price of Rs 460, the issue is priced at P/E ratio of 18.2x of its annualized 9MFY2017 EPS of Rs 19. We believe that the IPO is overpriced leaving little for the investors. Hence, we recommend to Avoid the IPO.”
  • Angel Broking: “Considering the company’s strong retail presence, diversified product offering, substantial same store sales growth (last five years average growth is 23%) and robust retail revenue of ~29% over FY2012-16, we expect that SBPL to witness higher revenues from its retail business going ahead. At the upper end of the price band, the pre issue P/E multiple works out to be 18.2x of its annualized 9MFY17 numbers. On EV/Sales, the issue is valued at 0.6x of annualized 9MFY17 numbers. Considering its long term prospects and reasonable valuation, we recommend Subscribe rating on this issue.”
  • Capital Market: Score 45/100.
  • Religare Retail Research: “Shankara’s financial performance has been subdued with its Revenue & PAT growing at a CAGR of 9.5% & 8.4% respectively over FY12-16. The company had witnessed a single digit growth in topline but the bottom-line suffered a setback due to escalated interest cost (debt take for expansion). Also it has generated negative cash flows over the last 5 years. The company is focused towards new expansions and inorganic acquisition and also planning to foray into new product verticals. With the growing demand of home building and home improvement products, the company intends to expand the footprints of Shankara Buildpro stores over the next few years. In the current financial year, the company has shown some improvement in its operating and profit margins, though these continue to remain low. At the upper price band of Rs. 460 per share, the company is valued at 24.3x on FY17E EPS (9MFY17 EPS annualized).
  • ET Intelligence Group: “At the upper price band, the IPO is priced at 20.7 times its FY17 annualised earnings. Given the strong earnings growth that the company has been delivering and the growth potential it holds, the IPO appears attractive.”

     

Standard disclaimer:  I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.