SPA Securities has ‘Neutral’ view on Shree Ganesh IPO

MUMBAI: SPA Securities is of the view that Shree Ganesh Jewellery House faces execution risks and may be unable to ramp up its volumes thereby affecting the bottomline. The brokerage has a ‘Neutral’ view on the IPO.

“At the upper band of Rs 270, the stock is available at a P/E and P/ BV multiple of 10.1x and 1.9x based on its post issue EPS of Rs 26.6 and BV of Rs 138.6 per share. The stock is available at cheaper valuations as compared to its peers. Further, SGL has a massive expansion plan and it intends to diversify its customer and geographical base. Refining pre-used gold will also spruce up the margins; however, the company faces execution risks and may be unable to ramp up its volumes thereby affecting the bottomline. Hence, we recommend ‘Neutral’ to the issue,” the brokerage said.

Shree Ganesh Jewellery House entered the capital market with public issue of 1.43 crore shares in the price band of Rs 260-270 per share of face value of Rs 10 each. The issue closes on Tuesday.

The company plans to use the proceeds for adding capacities, diversifying its product offerings, spreading its geographical presence, scaling up its retail chain segment and setting up of a gold refining facility.