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Precision Camshafts Ltd IPO - To Invest or Avoid

Precision Camshafts Limited is one of the world’s leading manufacturer and supplier of camshafts, a critical engine component, in the passenger vehicle segment based on companies estimated global market share by volume according to the ICRA Research Report..

Company supply over 150 varieties of camshafts for passenger vehicles, tractors, light commercial vehicles and locomotive engine applications from manufacturing facilities in Solapur, Maharashtra.

Company has recently won the awards for ‘Best Overall Exporter’ and ‘Best Manufacturer Exporter’ from Dun and Bradstreet India at the Export Credit Guarantee Corporation of India Limited Indian Exporters’ Excellence Awards under the medium exporters category in March 2015.

Total consolidated revenue as on 31st March 2015 INR 5,427.48 million.

Consolidated Net profit after tax for the year ended 31st March 2015 INR 623.63 million.
Consolidated Return on Networth as on 31st March 2015 is 26.68%.

Precision Camshafts Limited has proposed a Initial Public Offer (IPO) between January 27 - January 29, 2016.

Company Name : Precision Camshafts Limited.

Issue Period
January 27 - January 29, 2016.

Price Band
Rs. 180/- – Rs. 186/- per equity share.

Lot Size
80 shares & in multiple of 80 shares thereafter.

Issue Size Rs.410 cr. at upper price band.
Face Value Rs.10 each.
Listing To be listed on NSE & BSE.

Who Can Invest : Resident Indian individuals, HUF, Companies, Corporate Bodies, Scientific Institutions, Societies and Trusts, NRIs, FPIs.

Risk factors to be considered

However a major risk factor is that it gets its major share of demand from GM and Ford which is nearly 60% of the total sales. Thus without saying more one can see that they have majority of eggs in one basket and sluggishness in demand from these companies can dwindle their fortunes. Moreover; currency appreciation is another factor which needs to be kept in mind as it can hurt their profitability.

Verdict

One can subscribe the IPO as company's stock is trading at 17.6 times the estimated earnings of the next fiscal year, which is in line with other export-focused auto ancillary players such as Bharat Forge and Motherson Sumi.

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