IPO – Opal Luxury Time Products Limited

IPO - Opal Luxury Time Products Limited



Company Background:

Integrated in 2007, Opal Luxury Time Products Ltd is engaged in manufacturing and marketing of home decor products. Currently Opal design and manufacture wall & table clocks and market them under two brands, the premium brand ‘Opal’ and budget brand ‘Caliber’.

They offer 109 styles of clocks under their brand ‘OPAL’ those ranges from Rs 1450-27500. Also they have 31 styles of clocks under ‘Caliber’ brand with average price of Rs 370. Company is headquartered in Pune and currently has a manufacturing facility in the industrial area of Roorkee of Uttarakhand.

Company’s brand ‘Opal’ has 91 organized retailers which includes popular brands such as Shoppers Stop, Home Town, etc. Also they have tie ups with 10 online portals and also have their own shopping portal www.opalclocks.com. They have recently started exporting both their brands, ‘Opal’ and ‘Caliber’ to the United States.

Ipo Highlights:

  1. Investments in Moulds, tools and equipment and Indigenization of the designs for expansion of the existing manufacturing facility;
  2. Enhancement of the Company’s brand through advertising and other brand building activities; and
  3. General corporate purposes.

Ipo Details:

  1. Issue Open: Mar 25, 2013
  2. Issue Closes: Mar 28, 2013
  3. Issue Type: 100% Book Built Issue IPO
  4. Issue Size: Equity Shares of Rs. 10
  5. Issue Size: Rs. 13.00 Crore
  6. Face Value: Rs. 10 Per Equity Share
  7. Issue Price: Rs. 130 – Rs. 135 Per Equity Share
  8. Market Lot: 1000 Shares
  9. Minimum Order Quantity: 1000 Shares
  11. CRISIL Rating: “SME 4/5”

Ipo Digest:

Bombay Stock Exchange is all out to raise its SME IPO tally (total 22 till going to push)  it appears National Stock Exchange too is on the alike style and has an IPO for its Emerge (SME){ SMALL AND MEDIUM ENTERPRISES} platform candidate offering equity on 25 Mar’2013. The company is Opal Luxury Time Products Ltd. planning mobilization of Rs. 13 crore via book building route IPO. This is the third IPO for National Stock Exchange Emerge listing for the concluding financial. Opal Luxury is a premium home décor products manufacturing and marketing company. At present, it designs and manufactures wall and table clocks and markets them less than two brands: “Opal” & “Caliber”. It offers a large & diverse range of clocks at various price points across budget, mid-level and premium styles. Since December’2012, it had 109 styles of clocks under our ‘OPAL’ brand with price raging from Rs. 1450 and brazes upto Rs. 27500 with an average price of Rs. 4275 and a median range is at Rs 3750. For the second Brand “Caliber” it had 31 styles of clocks with average range of Rs. 370. Opal has a manufacturing facility in the industrial area of Roorkee, Uttarakhand. It primarily operates in the market of premium clocks, with in-house expertise in designing complemented by quartz skill.

Trademark ‘Opal’ has a wide presence with the products marketed by a network of 9 distributors, 242 dealers and 91 organized retailers which include popular brands such as Shoppers Stop, Home Town, etc. The company has also ventured into online sales by way of popular online shopping portals and currently have tie ups with 10 online portals and also have its own shopping portal at www.opalclocks.com. Opal has recently started exporting both our brands, ‘Opal’ and ‘Caliber’, to the United States. To supplement its Rs. 15 crore investments in Moulds, tools and equipment, and Indigenization of the designs for expansion of the existing manufacturing facility and enhancement of its brand through advertising and other brand building activities along with General corporate purposes fund raising plans, it is coming out with an IPO of an equity share of Rs. 10 each with a book building process within a price band of Rs. 130-135. Issue opens for subscription on 25Mar’2013 and will close on 28Mar’2013. Minimum application is to be made for 1000 shares and in multiples thereof, thereafter. Post allotment of the shares, it will be listed on National Stock Exchange Emerge (SME) platform. The company has already raised Rs. 2 crore by way of Pre-IPO placement at a price of Rs. 110 and thus the net offer is for Rs. 13 crore. IDBI Capital Market Services Ltd. is the sole BRLM and Karvy Computershare Pvt. Ltd. is the registrar to the issue.

Company Valuation:

Going on the company’s feat front, for last three fiscal’s average EPS of Rs. 65.99 has drastically fall to Rs. 6.29 (not annualized) for first six months of the current fiscal. Owing to preferential allotment of over 20.7 lakh shares in a price range of Rs. 10-23.88 during November 2010-2011. It’s equity has gone up to Rs. 2.36 crore. Previous to this, on 02 Mr’2009 it allotted 5100 shares at a price of Rs. 1932 per share and issued bonus in the ratio of 4 shares for every ‘1′ share held on 23 Mar’2009. Net Asset Value stood at Rs. 54.31 (as on 31Mar’12) and Rs. 60.59 (as on 30Sep’2012). Present are no listed peers to compare this company’s performance. Post IPO the equity capital will rise to around Rs. 3.36 crore and if we attribute its first half net profit of Rs. 1.37 crore on a turnover of Rs. 9.57 crore, the asking price is at a P/E of about 16 which makes it a costlier bet. Further when the pre-IPO placement is done at a price of Rs. 110 on 13 Mar’13, there is no reason to hike the price band to Rs. 130-135.

Ipo Conclusion:

Since Book Running Lead Manager’s {BRML} permission performance is concerned, this is the second SMALL AND MEDIUM ENTERPRISES platform IPO from it, and the 1st One is Thejo Engg. Has failed to give any return to investors so far. On overall basis, there were 19 mandates out of which NINE IPO’s failed to give listing gains from this Book Running Lead Manager.

Bearing in mind the entry barrier and the poor performance of over 75% SMALL AND MEDIUM ENTERPRISES Initial Public Offering {IPO} post listing despite market making efforts. It is better to AVOID.