IPO Update- SH Kelkar and Company Ltd.

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SH Kelkar and Company Ltd.
On debut day, shares ended 15% higher from issue price
Today, SH Kelkar and Company Ltd. (SH Kelkar) shares got listed on the exchange. The initial public offering (IPO) was priced at Rs. 180 with ~16.6mn
fresh shares in offering. The IPO was subscribed 27.1x times, in which qualified institutional buyers and non-institutional investors portion was
subscribed by 25.6x and 87.4x, respectively. The bidding date for IPO was 28th Oct. 2015-30th Oct. 2015. At the issue price, the company has raised
around Rs. 2.1bn from the fresh issue. The shares got listed at Rs. 222, touching a intra-day high of Rs. 223 and a low of Rs. 200, finally ending the
day at Rs. 207.3.
Net proceed from the issue will be used for following purpose:
• Repayment/pre-payment of debt (Rs. 1,260mn)
• Repayment/pre-payment debt availed by its subsidiary (Rs. 320mn)
• General corporate purposes (Rs. 332.5mn)
Valuation & Recommendation: SH Kelkar’s earnings have grown at a good pace in the past and the future prospect also appears bright. Factors such as
experienced management, high entry barriers and strong co-relation with Indian consumption growth augur well for the company. After annualizing Q1
FY16 net profit and assuming interest cost savings of around Rs. 140mn, EPS for FY16 is expected to be Rs. 6.3 (post issue). At higher price band of Rs.
180, SH Kelkar’s shares are available at P/E multiple of 28.6x to its FY16 EPS, which was at 5% discount to the average P/E multiple of around (P/E 30x) of
global industry peers (Givadaun, IFF and Symrise). Thus, we had recommended investors to “Subscribe” the issue.
CMP (*) Issue Price (Rs.) Listed Price Listing Date Day High / Low (*) Face value Our Recommendation
Rs. 207.3 Rs. 180 Rs. 222 16/11/2015 Rs. 222.7 / 199.6 Rs. 10 SUBSCRIBE
“In-line with our recommendation/expectation”
Rajnath Yadav | Board line: +91 22 6707 9999; Ext. 975 | rajnath.yadav@choiceindia.com
Nov. 16, 2015