Emami Cement IPO

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Emami Cement IPO Basic Details

Before we jump into the details of Emami Cement IPO, let’s have a quick understanding of some of the crucial data points related to this IPO:

 

Emami Cement IPO Background

Emami Cement limited is one of the leading manufacturing companies of cement in the eastern parts of India. Its operations began in December 2016. The company manufactures a wide range of products like Portland Pozzolana Cement, composite cement, etc.

The products are sold under the brand names, “Emami Double Bull”, “Emami Double Bull Master”, “Emami Double Bull Subh”. The customers of the company are concentrated in the states of West Bengal, Chhattisgarh, Maharashtra, Madhya Pradesh, etc.

There are three manufacturing units of the company situated at Risda in Chhattisgarh, Panagarh in West Benga and Bhabua in Bihar. One more manufacturing unit is about to begin its operations at Kalinganagar in Odisha. Emami Cement was awarded the ‘Brand of the Decade 2018’ by ERTC Media.

Emami Cement limited is now coming up with an IPO in the next few days and opening up its business for retail funding. Let’s see whether you should be investing in the Emami Cement IPO or not.

Emami Cement IPO Data Points

Emami Cement IPO will open on (undisclosed) and close for subscription on (undisclosed).

The IPO size will be of (undisclosed) lakh Equity shares and the face value of each share will be ₹10. The price band has been set at ₹(undisclosed) – ₹(undisclosed) per equity share. The offer price includes a premium of ₹(undisclosed) and is (undisclosed) times the face value of the equity shares.

The IPO size is expected to be up to ₹1000 Crores.

The offer consists of a fresh issue of:

• Up to (undisclosed) lakh equity shares aggregating up to ₹500 crores and
• An offer for sale of up to (undisclosed) lakh equity shares, aggregating up to ₹500 crores by Dr Radhe Shyam Aggarwal, Dr Radhe Shyam Goenka, Aditya Vardhan Agarwal, Harsh Vardhan Agarwal, Bhanu Vyapaar Private Limited, Diwakar Viniyog Private Limited, Suntrack Commerce Private Limited and other selling shareholders.

(undisclosed) lakh shares, aggregating up to ₹(undisclosed) crores will be reserved for subscription by employees.

Out of these (undisclosed) lakh shares, (undisclosed) lakh equity shares, aggregating up to ₹(undisclosed) lakhs will be allocated to retail investors for up to ₹(undisclosed) lakh.

The market lot size is of (undisclosed) equity shares and the shares will be listed on the National Stock Exchange and the Bombay Stock Exchange.

Pursuant to a resolution passed on August 9, 2018, the offer has been authorised by the Board of Directors and pursuant to a special resolution of the shareholders at the Extraordinary General Meeting held on August 28, 2018, the fresh issue has been approved by them.

The promoter selling shareholders, Dr Radhe Shyam Agarwal, Bhanu Vyapaar, Diwakar Viniyog and Suntrack Commerce gave their approval for the sale of their respective shares on September 24, 2018, September 11, 2018, September 6, 2018, and September 5, 2018, respectively.

Emami Cement Limited Financial Performance

This is one of the most crucial sections of this Emami Cement IPO review. Understanding the business financials and growth rates is one of the most important aspects that you must consider while taking a decision on an IPO investment.

 

The company reported a profit after tax for the period ended June 30, 2018, of ₹17.94 crores and losses of ₹78.57 crores and ₹38.05 crores for the financial year ended March 31, 2018, and fiscal year ended March 31, 2017.

The return on net worth of the company for the years ended March 31, 2018, March 31, 2017, and March 31, 2016, is (10.13%), (4.46%) and 1.09% respectively. The RONW of Emami Cement for the period ended June 30, 2018, is 2.26%. The net asset value (NAV) per equity share as of March 31, 2018, is 32.05 and as of June 30 2018, is 32.79.

Emami Cement IPO Objectives

The Emami Cement IPO consists of two parts:

The proceeds from the offer for sale of equity shares will be given to the selling shareholders. Any proceeds from the offer for sale will not be received by the company for its operations.

The main objectives of the fresh issue of equity shares in the IPO are as follows-

• For repayment or prepayment of some borrowings taken by the company
• For meeting expenses related to the general corporate operations.

Other than the above-mentioned objectives, the company will also benefit in terms of enhanced corporate image, brand name and increased visibility through Emami Cement IPO.

Emami Cement IPO Events

If in case you are looking to invest in this upcoming IPO from Emami Cement, then you must be aware of the specific dates on which different events related to this IPO are supposed to happen.

Here is a quick reference for you:

 

Emami Cement IPO Recommendation

Before deciding whether to invest in the Emami Cement IPO or not, let us discuss some of the key strengths and risks related to the business of the company.

Since the beginning of the operations of the company that started with a single manufacturing unit, the company has been able to scale up its operations to around 4 units in a time and cost efficient manner, which is a reflection of the strength of the company.

The manufacturing plants have been strategically located and enjoy the benefits of being close to the source of raw materials and consumption centres.

The manufacturing units of the company are equipped with modern technology. Another major strength of the company is its already well-established brand name.

Also, the strategies for future growth and expansion of the company look quite promising.

Now, let us come to the risks of the company.

Some of the company’s promoters and Directors are involved in certain criminal proceedings and any adverse ruling in them may pose a risk to the overall profitability of the company.

Another risk about investing in the company is its short operating history because of which it becomes very difficult to analyse and predict future performance related things.

The last two years of the company reflected losses on the balance sheet and it cannot be said with certainty as to when the company will be able to start making profits and sustain them on a long-term basis.

Any adverse developments in the eastern parts of India may adversely affect the profitability of the company as its operations are mainly concentrated in that region only. A shutdown or slow down of the manufacturing units of the company may have an adverse effect on the financial health of Emami Cement Limited.

The business requires sufficient power, fuel, water and raw materials for smooth functioning and any non-availability of any of these factors in a timely and cost-effective manner may have an adverse effect on the company’s performance.

One of the greatest risks to the company is the dilution of the well known and established “Emami” brand.

The business is exposed to the risk of seasonality, cyclicality, increase in interest rates and adverse fluctuations in foreign exchange. Mining operations of the company are exposed to the risk of hazards which if happen, may adversely affect the operations of the company.

The company requires certain approvals, permits, licenses, etc. in order to operate smoothly. Any delay or failure in obtaining them may have a negative impact on the functioning of the company.

The company depends on its distribution network largely and any inability to manage or expand it effectively may affect the overall health of the company.

After analysing various aspects of the company, it can be said that investors must remain cautious and should go through the Draft Red Herring Prospectus properly for further details about Emami Cement Limited. Investors can invest in Emami Cement IPO for long-term gains and not entirely for short-term listing benefits.

In case you are looking to invest in the Emami Cement IPO, let us assist you in taking the next steps forward.

 

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Emami Cement Limited Management Information

Currently, there are 9 Directors on the Board of Emami Cement Limited.

Manish Goenka is one of the promoters and the Executive Chairman of the company. He is a commerce graduate from the University of Calcutta. He is involved with business development, corporate strategic planning and finance related operations of the company. He was awarded the Global Man of the Year Award in the year 2011.

Emami Cement IPO Advisors Information

IIFL Holdings Limited, Axis Capital Limited, CLSA India Private Limited, Edelweiss Financial Services Limited and Nomura Financial Advisory and Securities (India) Private Limited are acting as Book Running Lead Managers to the issue. Karvy Computershare Private Limited is acting as the Registrar for the Emami Cement IPO.

Shardul Amarchand Mangaldas & Co is acting as legal advisor to Emami Cement Limited as to Indian law. Khaitan & Co is acting as the legal advisor as to Indian law and Sidley Austin LLP is acting as special United States legal counsel to Book Running Lead Managers.