Austral Coke & Projects is entering the capital market on
The company is promoted by father - son duo who are also the promoters of Gremach Infrastructure Equipments & Projects Ltd., which went public on 8th March 07, and made an IPO of Rs.59 crores, by issuing shares of Rs.10 at Rs.86 per share. This company has shown speculative activity on the bourses with share price having touched a high of Rs.500 in the first week of January 08 and now languishing at Rs.90 with low of Rs.80 made in mid July 08. This is inspite of the fact that the company posted an EPS of Rs.24.50 for FY 08. This translates into a PE multiple of less than 4 and inspite of the fact that the company is into infrastructure equipment hiring business which has good discounting and huge growth potential. But due to concern on the promoter's track record and issues of corporate governance, the share is rightly languishing at this level.
Mr. Ratanlal Tamakhuwala was one of the promoter of Gujarat NRE Coke, but due to family dispute, has disassociated himself in 1997, from the company.
The company is presently into manufacture of LAM Coke and refractory, trading of textile and providing rental of construction/earthmoving machineries. Though the company has its existing coke manufacturing plant in
The company has agreement with group companies for similar business of equipment hiring and purchase & sale of coke for management fee, which clearly conflicts with the interests of the company. So what is the necessity to have a separate company for both these business in this company?
The whole structuring of the company's business has been made to enable the company to come out with an IPO. The bottomline of the company was at Rs.9.15 crores for FY 07 which rose to Rs.35.18 crores for 11 months ending
The promoters have tasted the public money and by launching this IPO are planning to mobilize about Rs.150 crores, including green shoe option. Considering the track record of the promoters and of the company's performance, it can only be presumed as a speculative issue solely for the benefits of the promoters.
A clear advice is to remain away, if you have fundamental view.