Thursday, July 24, 2008

Somi Conveyor Beltings Trades Discount Over IPO Price - July 24, 2008

The stock debuted at Rs 37.65 which was also a high for the day so far during the day. At the debut price of Rs 37.65, the stock attracted 5% premium over the IPO price.

It hit a low of Rs 28.15. On BSE, 35.75 lakh shares changed hands in the counter.

The current price of Rs 28.50 discounts the company's nine months ended December 2007 annualised EPS of Rs 1.1 by a PE multiple of 25.90.

The fixed price IPO of Somi Conveyor Beltings was subscribed 1.92 times.

The company had entered the capital markets on 24 June 2008 with an issue of 62.27 lakh equity shares of Rs 10 each at a fixed price of Rs 35 (including a premium of Rs 25 per equity share) aggregating to Rs 21.79 crore.

The company is manufacturs rubber conveyor belts of various sizes used for industrial applications of material handling in various industries such as coal, lignite, iron ore, mining, cement, power, steel, fertilizer and sugar and it has also recently introduced food grade belts for tea gardens and salt industries.

The company proposes to utilize the net proceeds of the issue to part finance its Rs 35.09 crore project cost. The expansion and modernization project consists of setting up of new manufacturing unit, purchase of land and building for office use, meeting margin money requirement for enhanced working capital and meet the interest cost during the construction period.

The company, earning profits since last 5 years, had commenced production with an initial capacity of 36,000 meters per annum (MPA) and it has expanded to present operating capacity of 1,67,660 MPA.

Depending upon the width of the rubber conveyor belt the capacity utilization can be stretched up to 2,00,000 MPA.

The company reported a net profit of Rs 0.96 crore on sales of Rs 10.92 crore in nine months ended December 2007.

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