Lagnam Spintex IPO

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(i) Rajasthan based Lagnam Spintex Limited was incorporated in 2010, Lagnam Spintex Limited is an ISO 9001:2015 certified Company engaged in the business of manufacturing of high quality open end yarn for domestic and export market ranging from count Ne 4 to Ne 20 which is used in Denim, Terry Towels, Bottom Wears, Home Textiles and Industrial Fabrics etc.

(ii) The manufacturing facility of the Company is situated in Bhilwara District in Rajasthan State and spreads over 10,000 square meters. The Company has at present an installed capacity of 1,920 rotors for cotton yarn having capacity to produce 16.5 tonnes per day of high quality yarn. The Company has continuously expanded and modernized the facilities in line with the industry trend and the Company plant is equipped with modern and automatic plant and machinery.

(iii)The company has been recognized as “One Star Export House” by the Director General of Foreign Trade with a certificate valid from 2017 to 2022. They have also received OEKO Tex certification. They have a dedicated in-house Testing and Quality Control Team which undertakes rigorous testing and quality management. They are one of the few open-end cotton yarn manufacturers globally who have received certification from USTER Technologies AG.

(iv) The Company is presently exporting cotton yarns to countries like Portugal, Italy, Germany, Belgium, South Africa, Slovania, Columbia, China, Pakistan, Bangladesh and others.They supply to customers, who are in fields like apparel and garment industry, industrial fabrics, towels, Denims etc.

(v) In the past five years, the company’s revenues have increased from INR 49.83 Cr in 2014-15 to INR 8,4.54 Cr in 2017-18 at a CAGR of around 19%. The Net Profit after tax has grown at a CAGR of almost 43% in the last three years. The company has 79 permanent employees on its payroll.

Lagnam Spintex IPO Stock Quote & Charts

19.90

-4.78%

  • Open: 20.05
  • High - Low: 20.05 - 19.90
  • Previous Close: 20.90
  • Total Traded Volume: 12000
  • Updated On: 12-Nov-2018

Objects of the Lagnam Spintex IPO:

Objective of Lagnam Spintex Limited IPO are: 1. Part finance the setting up of the additional cotton yarn manufacturing facility (22 Cr) 2. Meet Issue expenses (2.6 Cr)

Lagnam Spintex IPO Details:

Open Date: Sep 04 2018
Close Date: Sep 07 2018
Total Shares: 6,000,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price IPO
Issue Size: 24.6 Cr.
Lot Size: 3000 Shares
Issue Price: ₹ 41 Per Equity Share
Listing At: NSE Emerge
Listing Date: Sep 18 2018

Promoters And Management:

Promoters of Lagnam Spintex Limited Company are: (i) Mr. Dwarka Prasad Mangal, aged 69 years is Promoter Director of th Company. Mr. D. P. Mangal takes care of financial and operational aspect of the Company. He is a qualified Chartered Accountant with vast industrial experience which includes more than 35 years in textile industry. He has also served as the top managerial positions in Large Textiles corporate companies such as RSWM Ltd & JCT Limited and was involved in various expansion projects of RSWM Ltd. He plays an important role in our Company and is responsible for its future growth. He also assists the Board in making business strategies, formation of policies, technological up gradation plan and new product development. . (ii) Mr. Anand Mangal, aged 35 years is the Promoter and Managing Director of the Company. He has been on the Board of Our Company since incorporation. He has completed BSC (Honors) in Business & Management Studies from University of Bradford, UK. He has also worked with ICICI Bank from June-2006 to Mar-2011. During his tenure with ICICI Bank he was dealing with large corporate customers and MNC’s. Since 2011 he is working as Managing Director of the company responsible for production, marketing, purchase and administration of the existing textile facilities. (iii) Lagnam Infotech Solutions Private Limited

Capital Structure:

(i) Authorized Share Capital 2,25,00,000  Equity shares at FV@10) 22.5 Cr
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue (1,16,69,000  Equity Shares at FV@10) 11.669 Cr
(iii) Present Issue Fresh shares upto (  60,00,000 Equity Shares at FV@10) 6 Cr
(iv) Reservation for Market Maker 3,00,000 Shares at FV@10) 30 Lacs
(v) Reservation for QIB & HNI 28,50,000 Equity Shares at FV@10) 50%
(vi) Reservation for Retail 28,50,000 Equity Shares at FV@10) 50%
(vii) Paid Up Share Capital after the issue 17.6 Cr

Financials of Lagnam Spintex IPO:

1. Assets and Liabilities Key Parameters
Year Asset(lacs) Liabilities(lacs) Net Worth(lacs) Book Value D/E (<2) RONW Receiveable days
FY14 4,140.96 2,899.66 1241.3 60 2.3 12% 51
FY15 5,398.85 3,899.73 1499.12 66 2.6 11% 49
FY16 7,053.10 5,345.47 1707.63 75 3.1 12% 60
FY17 7,187.53 5,112.82 2074.71 91 2.5 18% 44
FY18 8,371.10 5,726.70 2644.4 23 2.2 18% 38
Post Issue 5104.4 29 1.1 9%
2. Profit n Loss Key Parameters
Year Revenue(lacs) PAT(lacs) EBITDA Margins Profit Margins Outstanding Shares(lacs) EPS
FY14 4205.99 144.71 14.00% 3.44% 20.68 7.00
FY15 4983.41 157.82 13.11% 3.17% 22.68 6.96
FY16 5656.41 208.5 16.00% 3.69% 22.68 9.19
FY17 7538.43 367.09 15.31% 4.87% 22.68 16.19
FY18 8454.47 468.49 13.23% 5.54% 116.69 4.01
Post Issue 176.69 2.7
3. Cash Flow Statement(all figures in lacs)
Particulars FY18 FY17 FY16 FY15 FY14
(i) Net Cash Generated from Operation 470.77 841.09 635.55 210.03 394.68
(ii) Net Cash Generated from Investment -649.1 -41.11 -1587.88 -1057.93 -223.1
(iii) Net Cash Generated from Financing Activity 184.89 -805.98 932.37 742.56 -143.93
(iv) Total[ (i)+(ii)+(iii) ] 6.56 -6 -19.96 -105.34 27.65
(v) Cash and Cash Equivalents at the Beginning of the Year 2.42 8.42 28.37 133.71 106.06
(vi) Cash and Cash Equivalents at the end of the Year 8.98 2.42 8.41 28.37 133.71
Key Notes: a) The Revenue is growing at CAGR of 19.08% from FY14 to FY18. b) The PAT is growing at CAGR of 34.25% from FY14 to FY18.[Excellent Growth] c) The Annualized EPS[ Post Issue] = 2.7 d) P/E(post issue)= 15.18[ Reasonably Priced]. e) P/B(post issue)= 1.41[ Reasonably Priced] f) D/E(post issue) =1.72 g) Mcap/Sales(ideally <2)= 0.85 on FY18 sales(Reasonable priced). h) The Company has generated Positive Cash flows from operations in last 5 years. [Very Positive] i) The Company's receiveable days have gone down from 44 Days in FY17 to 38 Days in FY18 [Positive].

Comparison With Peers:

Name of the Company FV Mcap(cr) Revenue(cr) Adjusted P/E RONW Mcap/sales
Lagnam Spintex Limited 10 72.16 84 24.44 9% 0.86
PBM Polytex Ltd 10 72.31 200 11.40 5.00% 0.36
KPR Mills 5 4980.86 2526 24 16.00% 1.97
Sambandam Spinning Mills 10 45 194 32 3.00% 0.23
VippySpinpro 10 24.94 106 7.19 9.50% 0.24
Source: MoneyControl and DRHP of Lagnam Spintex Limited Note: (i) The Financials as per FY18 is taken for the calculation. (ii) The price of shares of Peers taken on the closing of 27.08.2018. (iii) The RONW of Lagnam Spintex is calculated on post equity dilution.

Recommendation on Lagnam Spintex IPO:

Review and Recommendation of Lagnam Spintex Limited IPO from IZ Team is: 6/10 [ The Issue seems to be reasonably priced in terms of P/E, P/B, and Mcap/Sales. The Company is generating a positive cash flows from operations. The Company has shown excellent growth in the last 5 years. The company's new plant which is supposed to be functional in the year 2019 will further boost growth ] 1-5: Fair 5-7: Good 7-10: Excellent.

Registrar of Lagnam Spintex IPO:

  1. Bigshare Services Private Limited

Company Address:

Lagnam Spintex Limited A-51-53 RIICO Growth Centre Hamirgarh, Bhilwara Phone No. +91 014 82 289210 Email id. rparashar@lagnam.com Website: www.lagnamspintex.com

25th Sep 2018 - 27th Sep 2018 => Aavas Financiers IPO

Bid Details of Lagnam Spintex IPO as on
07-Sep-2018 18:00:00 IST

Category No.of shares offered No. of shares bid
2,850,000 12,219,000
2,850,000 16,089,000
300,000 300,000
6,000,000 28,608,000
QIBs Yes
QIBs+HNIs Subscription 4.29X
Retail Subscription 5.65X
Total Subscription 4.97X

Discussion on Lagnam Spintex IPO:

    Kal se koi laganm ka lot sell na kare hamare pas yehi rasta he aagar koi bi sell na kare to Diwali bumper jackpot ho jayega

    Lagnam Spintex Limited – Subscription Update, excluding Market Maker Reservation
    As per live data – 119.19 lakh shares in Non-Retail & 160.89 lakh shares in Retail.
    Before rejection – 61.65 lakh shares in Non-Retail & 153.48 lakh shares in Retail.
    About 48% of the NII bids have not been submitted for banking.

    Those who have lost money in Lagnam Spintex IPO can write to SEBI demanding a probe into the identities of the applicants who bid but don’t submit for banking – and see if a pattern can be established..

    *Lagnam Spintex Limited – Subscription Update, excluding Market Maker Reservation*
    As per live data – 119.19 lakh shares in Non-Retail & 160.89 lakh shares in Retail.
    Before rejection – 61.65 lakh shares in Non-Retail & 153.48 lakh shares in Retail.
    About 48% of the NII bids have not been submitted for banking.

    Those who have lost money in Lagnam Spintex IPO can write to SEBI demanding a probe into the identities of the applicants who bid but don’t submit for banking – and see if a pattern can be established..

    There was attempt but guess sellers were way too high.

    18-Sep-2018 LAGNAM Lagnam Spintex Limited MEHTA KISHORE KUMAR BUY 90,000 39.24 –
    18-Sep-2018 LAGNAM Lagnam Spintex Limited PROFESSIONAL ARBITRAGE CONCEPTS PVT LTD BUY 99,000 41.00 –
    18-Sep-2018 LAGNAM Lagnam Spintex Limited SUMAN BOHRA BUY 4,50,000 41.00 –

    Sir I have bidded 4 physical application of lagnam sintex it oversubscribed very less only 5 times.should I deposit on monday.can I get any profit handsome or not pl suggest.looking risky but company running in profit since last 5 year

    It is avoid for me due to 2 main reasons
    1) Promoter have pledge share 4929000 and 900000 for securing loan of 94 crore
    It is not good for promoter pledge share even befor an IPO sme.
    We have seen in the past WAA solar where promoter pledge share.
    2) Yarn Business – There hardly any Yarn Business that have reward investors.

    Even though experience management and good Lead manager Performance.
    It is still not giving enough reason to apply consider the pledge of share by promoters

      They have obtained a loan of 94 Cr from SBI and PNB at an Interest of 9.50% and 10.50% but they will get a discount of 6% from Rajasthan govt so net interest they are paying is only 3.5% – 4.15%. The total interest cost comes out to be 3.29 Cr to 3.9 Cr. Moreover, the company whose has clocked EBITDA close to 11 Cr in FY18 so interest rate won’t have much effect. However, if any headwind comes in the business this will have severe effect going forward.

        But yes pledging of shares can pose serious issues if any headwinds come in the sector.

            Wait for last date. Based on the subscription figure we will take a decision.

              For 94 crore loan if we calculate the interest even at 4.5 pc consider the discount they still have to pay 4 crore as interest on loan amount. Their total profit is 4 crore which mean no profit yearly. It might give listing gain if there is high subscription . If the subscription don’t cross 10 times in HNI chance of listing flat or discount.take a call on last day only

    (Debt Story as on FY18)
    (i) Short-Term Debt= 17.41
    (ii) Long-Term Debt= 27.41
    (iii) Equity= 26 Cr
    (iv) D/E= 1.72

    As on FY18, the Company has a contingency liability of 2.43 cr, if materializes will impact company.

    Contigency Liability- It is that liablity which is not accounted in balance sheet.

    (i) The Promoters, Lagnam Infotech Solutions Pvt. Ltd and Mrs. Veena Mangal, member of promoter group, have pledged their 49,29,000 and 9,00,000 equity shares, representing 50% of the Pre-IPO equity share capital in favour of consortium of State Bank of India & Punjab National Bank for securing loan of` 94 Crores to the Company, for setting up additional manufacturing facility to manufacturer ring-based yarn.

    (ii) In the case of a default by the Company– Consortium of Banks State Bank of India & Punjab National Bank will have various rights including right to register and may transfer the pledged shares to any of its associate or to a third party.

    The business of the company is seasonal as the main raw material is Cotton. So during the season of cotton the financial performance gets elevated and conversely, it may go southward in off seasons.

    (i) The Company is planning to setup an additional yarn facility for which the cost incur would be close to 125 cr . In order to fund the expansion the company has taken a loan of 94 Cr from the banks, 22 Cr will be taken IPO proceeds and rest 9 cr will be used from Internal accruals.

    (ii) The company has placed orders for plant and machinery and equipment’s amounting for Rs46.20 crore comprising 55.92% for total cost of Plant & Machinery. The orders for balance amount i.e. Rs.36.43 crore (44.08%) are yet to be placed. However, in case there is delay and if cost increases the company has to arrange the funds from internal accruals and which may affect growth and financial performance.

    (iii) The commercial operations for the new proposed manufacturing unit were expected to being March 2019. The COD was to be finalized by the lenders which was determined as September 2019. Accordingly, and in line with the COD, the company is expected to commence commercial production from September 2019.

    (i) There are certain Income Tax and TDS related demand against the promoters of the
    Company. A demand of Rs. 31,916 is standing against the name of Mr. Dwarka Prasad Mangal for the
    Assessment Year 2010-11.

    (ii) Another promoter of the company Mr. Anand Mangal has filed appeal against the order of
    CIT for the Assessment Year 2013-14 relating to tax demand of Rs. 2,05,410.

    (iii) There are various tax demands (Rs. 1,90,530 in total) outstanding against M/s. Lagnam
    Infotech Solutions Private Ltd. in the Income Tax Act for various assessment years in the
    Income Tax Portal.

    (iv) Further, there are TDS Demands of Rs. 70,120 for various quarters as against the company
    for short payment/ delayed payment.

      Expected Listing Gain !!
      Subject to is 8500 as of today.
      Shall see subscription figures tomorrow before applying !!

        Final recommendation based on last day subscription ?
        Below are current subscription figures as on 07-Sep 10.15 AM
        Retail Subscription 2x
        Total Subscription 1.2x