Globus Spirits is entering the capital market on 31st August 2009 with a public issue of 75 lakh equity shares of Rs. 10 each in the band of Rs. 90 to Rs. 100 per share.
The Company is an established liquor player having two distilleries in Rajasthan and Haryana each, with capacity of 144 lakh bulk liters, for each site. The Company has its own brand presence in country liquor and IMFL as also catering to other IMFL brands.
Financial performance of the company for FY09 has also been quite good with sales of Rs. 281 crores and PAT of Rs. 12.93 crores, resulting in an EPS of Rs. 10.55 on its pre - IPO equity of Rs. 12.26 crores. Even Q1 of FY10 has posted good performance with total income of Rs. 92 crores and PAT of Rs. 6.78 crores, giving an EPS of Rs. 5.55 for the quarter. This implies an EPS of Rs. 20 plus, for FY10, on pre-IPO equity and issue now being made at a PE of 5 times, even at the Upper band of Rs. 100.
The company now proposes to modernize and expand its production facilities with total outlay of Rs. 89 crores. This is being partly funded by term loan of Rs. 12 crores and internal accruals of Rs. 14.28 crores with Rs. 63 crores to be sourced via this IPO. All this programme will increase the production capacity of the company, energy conservation and waste use, enhancing brand presence as also improving distribution network and outlets. This would start reflecting in the financials of the company, surely from FY 11. Promoters stake in the company, post IPO, would be at around 60%, which looks comforting.
Considering all these, issue is recommended even at the upper band of Rs. 100.