Opal Luxury Time Products’ IPO: Good Times

Watch manufacturing company Opal Luxury Time Products (OLTP) is the next in line to come up with an IPO. The listing for offered equity shares will be on the NSE SME platform. This offer opens on March 25, 2013 and will close on March 28, 2013. The proposed listing of OLTP is to raise funds to the tune of Rs 13 crore. The book running lead manager for the offering is IDBI Capital Market Services.

The net equity shares offered to the public are 9.5 lakh. 50,000 shares are reserved for market makers, which accounts for an amount of Rs 65 lakh. The issue will be based on 100% book building method. The price band stands between Rs 130 and Rs 135, with a face value Rs 10 per share.

The maximum subscription amount for retail investors is Rs 2 lakh and the minimum market lot size is 1000 equity shares. Prior to the public issue, the company has issued 1.82 lakh equity shares through pre-IPO placement at a price of Rs 110 per share, to raise an amount of Rs 199.99 lakh.

OLTP was incorporated in 2007. The company is headquartered in Pune, Maharashtra, has manufacturing facilities located at Roorkee, Uttarakhand, and warehouses at Pune and Navi Mumbai. It is engaged in the manufacturing and marketing of premium home decor products. OLTP manufactures self-designed wall clocks and table clocks. It offers a wide range of budget, mid-level and premium styles of clocks under the brand names Mystique, Eternity, Caliber, Opal, Cyber, Panache, Grandeur and Signature.

Opal is the OLTP's flagship premium brand, and clocks under this brand are marketed by popular retail outlets like Shoppers Stop, Home Town, etc. Caliber is its budget brand of clocks, of which the company has 31 styles. In recent times, OLTP has also ventured into online sales. The company has recently started the Opal and Caliber brands to the United States market.

The net proceeds of the issue will be utilised by the company for the expansion of its manufacturing facilities and for brand building activities. It intends to invest Rs 1029.95 lakh in modules, tools & equipment, for indigenisation of designs and to expand the existing manufacturing facility at Roorkee. The overall expansion activity will be undertaken in the period between FY13 and FY15. Further, a sum of Rs 390.50 lakh will be utilised for advertising activities like online marketing, electronic media, outdoor and for events & sponsorship.

On the financial front, the company has posted moderate results on an annualised basis. Its topline grew to Rs 957.32 lakh in the first half of FY13 from Rs 1721.53 lakh in FY12. It posted a considerable net margin of 14.22% in H1FY13 and 16.68% in FY12, whereas, the bottomline reached to Rs 136.84 lakh in H1FY13 against Rs 288.72 lakh in FY12. In the last 5 years’ period, OLTP's topline saw a CAGR of 34.6%, while its bottomline recorded a CAGR of 46.93%. Moreover, the offer price, at lower band of Rs 130, is quoted at a PE of 16x of EPS Rs 8.15 on FY12 basis. In the upper band, the offer price of Rs 135 is quoted at PE of 16.56x of FY12 EPS.

Considering OLTP's healthy financial performance in the past, the investors can surely go in for this offering.