IPOTRENDS : Apply in Precision Pipes IPO

Ipotrends : Precision Pipes And Profiles IPO will open tomorrow, with a public issue of Rs.75 cr of equity shrares of Rs.10 each with a price band of140-150 per share.

Precision Pipes involves in manufcturing of automobile sealing systems and exterior products includes product range includes trim door opening,wheather strips,roof molding and winshiled molding and also it manufactures PVC based customised profiles for white good and other industries. It is having five manufacturing facilities with a total installed capacity of 47.50lakh Kg per annum. PPAP is a OEM supplier to automobile industry and its client list includes Honda Siel and Maruthi Udyog and General Motors.

PPAP is getting 90% turonver from its automobile customers and 5% from white goods and remaning from construction and electrical segments. Now PPAP is expanding its automotive sector business. The IPO money will be utilised for expansion programme. The company is plant to increase its capacity from 45.50 kg per annum to 7 lakh kg per annum by March'2008. PPAP s 83% of sales are coming from from top 5 customers and 53% of sales is coming from Maruti Suzuki. The existing customers are planning to increase their capacities this will be the better opportunity for PPAP.

The total cost of the expansion will be Rs.106 cr, out of which 75 cr will be from IPO and Rs.25 cr will be taken as term loans and remaining Rs. cr will be adjusted from internal sources.The past performance of the PPAP is good. For FEB07 the total income was at Rs.109 cr with EBITDA of Rs.27.89 cr resulting a margin of 25% with PBT of Rs.21.24 and Netprofit fo Rs.13.88 cr, the same tempo has been continued in June'07 quarter results also. We expect that for FY 08 PPAP s topline should be more than Rs.130 cr and PAT will be at Rs.22 cr resulting an EPS will be Rs.25 on pre equity base of Rs.9 cr and it will be Rs.15 on post issue equity capital of Rs.14 cr.

The valuations of PPAP is very attractive when it compared to its peers, and having top customers in its portfolio and customers are also having expanding their capacities will be a better advantage to PPAP hence one can apply for this IPO for better listing gains.P