Gayatri Rubbers launches Rs.4.58 crore IPO. Should you invest?

Gayatri Rubbers IPO Review

Gayatri Rubber Launches IPO

SME GRCL (Gayatri Rubbers and Chemicals Limited) is floating its IPO that opens on 25th January 2023. The IPO is aimed to raise Rs.4.58 crores through a fresh issue of equity shares. As the IPO hits the market today, here’s a review of the company and its financials to help you understand whether or not to invest.

About GRCL

Gayatri Rubbers and Chemicals Limited is a relatively new company that was incorporated formally in 2022. The company is engaged in manufacturing and marketing different types of rubber profiles and components. Some dealers who buy from GRCL include Nalco, Banco, and Jindal.

GRCL IPO Details

The details of the Initial Public Offering (IPO) are as follows –

GRCL IPO Details

Related - Read more to find out the different types of IPO investors 

Review of GRCL IPO

The IPO is garnering negative reviews from experts because of the following reasons –

  • Financial performance vis-à-vis issue pricing

Over the last three fiscal years, GRCL has posted a turnover of Rs.6.57 crores, Rs.15.63 crores, and Rs.16.74 crores. The corresponding net profit has been Rs.0.07 crores, Rs.0.15 crores, and Rs.0.81 crores, respectively. The average Earnings Per Share (EPS) and Return on Net Worth (RoNW) were Rs.8.83 and 33.67%, respectively.

Annualizing the earnings of the latest financial year and corresponding it with the diluted paid-up equity share capital, the issue price has a price-earnings (P/E) ratio of 23.62, which is quite high. As such, the pricing of the issue is aggressive.

  • Dividend income

The company has never declared any dividend income so far. As such, this indicates a loss of regular income for investors as the post-listing dividend policy does not look promising.

Moreover, the company’s margins jumped in the last 21 months of operation, which is also a red flag. The company is issuing a limited number of equity shares, so it would take time for the company to move to the main board.

All these factors point to an avoidance strategy. As an investor, you can avoid this IPO as it does not seem lucrative.

Related - Here's a look at the SME IPOs in 2022 and their success rate


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