Shankara Building Products Ltd - IPO Report
Co is one of the leading organised retailers of home improvement and building products in India based on number of stores, operating under the trade name Shankara BuildPro (Source: CRISIL Report). Co serve home owners, professional customers (such as architects and contractors), and small enterprises, through its retail stores. Additionally, in the semi urban markets, co also cater to specific agricultural requirements of individual customers and small enterprises. Under retail operations, co offer a comprehensive range of products at its stores, including structural steel, cement, TMT bars, hollow blocks, pipes and tubes, roofing solutions, welding accessories, primers, solar heaters, plumbing, tiles, sanitary ware, water tanks, plywood, kitchen sinks, lighting and other allied products. Co carry reputed third party brands such as Johnson, Sintex, Uttam Galva, Uttam Value, Futura, APL Apollo, Astral Pipes and Alstone and co’s own brands such as CenturyRoof, Ganga and Loha at its retail stores. Co is backward integrated through its processing facilities in select building products like steel pipes, colour coated roofing sheets, bright rods, galvanized strips and cold rolled strips. Co sell these products under its own brands like CenturyRoof, Ganga, Loha, Taurus and Prince Galva through its retail and branch network. To cater to its customers, co also have a robust logistics network which, as of December 31, 2016, consisted of 56 warehouses (29 operated by company, 23 operated by TVSPPL and 4 operated by CRIPL) aggregating 0.59 million sq. ft., and a fleet of 44 owned trucks to augment co’s last mile delivery. Co intends to raise funds through fresh issue for repayment or pre-payment of certain loans worth of Rs 34 Cr.
Reasons to "Subscribe"
As on December 31, 2016, co offered its suppliers a growing network of 103 retail outlets spread across 9 states and 1 union territory in Tier-I Cities, Tier-II Cities and Tier-III Cities. As of December 31, 2016, co operated 30 stores in Tier-I Cities, 30 stores in Tier-II Cities and 43 stores in Tier-III Cities. Company was founded by its Promoter, Sukumar Srinivas, an alumnus of the Indian Institute of Management, Ahmedabad, and a first generation entrepreneur, currently having 33 years of experience in the building products industry.
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At price band of Rs 440-460 ,p/e multiple will turn out to be 18- 19 on post issue annualized H1FY17 eps of company. Looking after fundamentals of company, issue looks attractive for long term Hence we recommend "Subscribe" on issue for long term investment horizon.