Vaxtex Cotfab Limited IPO

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(i) They are engaged in the business of Textile processing of fabric and trading. The Company is engaged in the Processing (dyeing and finishing) of grey fabrics for shirting, suiting, and other accessories and also on outsourcing basis for other fabric/garment companies.

(ii) They have an installed capacity of 12,00,000 meters/month for processing of various fabrics from natural and man-made fibers specializing in 100% cotton, Giza & Supima cotton blended fabrics, polyester viscose, and polyester cotton. The Company procures Grey fabrics and processes it into Finish Fabric as per the client’s requirement.

(iii) In the year 2017, the Company has procured machines with the latest technology for processing of fabrics and also consequently increased the installed capacity.

(iv) The processing unit is located at Narol, Ahmedabad in Gujarat and the majority of the manufactured goods are dispatched from this unit itself. They also have a Packing and Storage unit at a nearby place to the unit, Narol, in Gujarat and they also dispatch the Stocked goods and certain outsourced processed goods from this unit.

InvestorZone take:

The textile sector in India is going through a very bad phase. The SMEs which are listed in the past year are reeling under huge pressure and has made the loss to investors.

Objects of the Vaxtex Cotfab Limited IPO:

The company is raising funds from the IPO for the following objects( 3.83 Crores ) a. To acquire the Machinery- 59.40 lakhs b. To meet Working Capital Requirements- 2.50 Crores c. General corporate purpose- 43.60 lakhs d. To Meet the Issue Expenses- 30.04 lakhs

Vaxtex Cotfab Limited IPO Details:

Open Date: Dec 27 2019
Close Date: Jan 03 2020
Total Shares: 1,596,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Issue
Issue Size: 3.83 Cr.
Lot Size: 6000 Shares
Issue Price: ₹ 24 Per Equity Share
Listing At: NSE Emerge
Listing Date: Jan 13 2020

Promoters And Management:

(i) Mr. Khushant Gupta, aged about 21 years, is the Promoter and Managing Director of the company. He has experience of two years in the field of Textile Industry. He has completed his graduation from Gujarat University in the year 2018. He has been appointed as the Managing Director of the company w.e.f April 26, 2019. (ii) Mr. Mithleshkumar M Agrawal, aged 56 years, is the Promoter and Non-Executive Director of our company. He passed the secondary examination from Rajasthan Board. He looks after the administration part of the Company. He has more than 10 years of experience in the textile industry. He is associated with our company since February 15, 2018.

Financials of Vaxtex Cotfab Limited IPO:

Year Revenue(Lakh) EBITDA(Lakh) OPM PAT(Lakh) NPM EPS
2016 65 1.5 2% 0.78 1% 0.01
2017 446 5 1% 1.85 0% 0.03
2018 1846 38 2% 17.09 1% 0.28
11MFY19 1990 122 6% 82.23 4% 1.37
InvestorZone Take: 1. There is a sudden increase in Revenue, EBITDA Margin, and PAT in FY18-19, as compared to previous years. 2. The trade receivables days have also gone up from 60 days in FY18 to 90 days in FY19, which shows cash is delaying in the business. 3. In spite of having tremendous performance in terms of PAT in FY19, the cash flow from operation is negative. The company has a very good profit of 82 Lakh, but cash in hand is negative at -4 lakh, which shows the company is not doing well operationally. 4. The company has an average PAT of 33 lakh in the last 3 years. The EPS(Average) is 0.54. So P/E(Average)= 44, which is overvalued.

Recommendation on Vaxtex Cotfab Limited IPO:

Review and Recommendation of InvestorZone is: 1/10

Lead Manager of Vaxtex Cotfab Limited IPO:

  1. CAPITALSQUARE ADVISORS PRIVATE LIMITED

Registrar of Vaxtex Cotfab Limited IPO:

  1. Bigshare Services Private Limited

Bid Details of Vaxtex Cotfab Limited IPO as on
03-Jan-2020 16:55:00 IST

Category No.of shares offered No. of shares bid
756,000 1,398,000
756,000 3,168,000
84,000 84,000
1,596,000 4,650,000
QIBs No
QIBs+HNIs Subscription 1.85X
Retail Subscription 4.19X
Total Subscription 3.02X

Discussion on Vaxtex Cotfab Limited IPO:

    Litigation Against Company

    (i) The Company has received a notice dated December 8, 2018 under Insolvency and Bankruptcy Code, 2016 from Bhavin Industries (Operational Creditor). According to the Operational Creditor, they have issued invoices on goods supplied over verbal instructions from October, 2017 to May, 2018, which have been accepted by our Company. In part payments of outstanding due our Company issued cheques for amounts of Rs.5,07,849, Rs.6,00,000 and Rs.6,00,000 which were dishonored by the bank due to insufficient funds. Operational Creditor is demanding Rs. 25,43,643 along with interest of 24% from the last issued invoice i.e. June 13, 2018 with respect to unpaid operational debt.

    (ii) Default in payment of TDS of value only 1.5 Lakh. As per TDS Reconciliation Analysis and Correction Enabling System (TRACES), website of Income Tax for TDS, there is delay in payment of TDS by the Company.