IPO Update: SRB Steels Limited

SRB Steels: Do you dare to apply?

SRB Steels has come up with an IPO offering 2 Crore shares at a price band of Rs.20-22

Investment Guru Recommends investors to avoid this IPO.

Why shouldn't I apply in this IPO?

1. Considering the earnings of the company at Rs.2.99 per share, the offer comes at a P/E of 7.36 at the higher end of the price band. I would prefer to buy a quality steel stock like TISCO and JVSL that are trading at a P/E of 5.

2. The company is a part of Jai Balaji group of companies belonging to jajodia family. Looking at the waythe companiess are structured in the group, it doesn't look like a professionally managed group. Also, the other companies in the group are not doing well.

3. The Metal industry in general and steel sector in particular is going through a downward trend. The best approach is such cicumstances is to stick to quality stock.

Happy Investing !!

10 comments:

Anonymous said...: Hi Guru,
After reading your post, I will not dare to apply :); July 09, 2005
Anonymous said...: Thanks for the update Rajesh; July 09, 2005
Anonymous said...: I agree with you.; July 09, 2005
Anonymous said...: Dear Sir,
My name is santosh sharma and I belong to bikaner. I have invested Rs. 50000 in Reliance industry stock at 640. but the stock is now coming down.
Please advice whether I should hold or sell.
I will be thankful to you.; July 10, 2005
Rahul Munjal said...: I also wont apply then....; July 11, 2005
Anonymous said...: Hi Rajesh,
I am kunal here..and i have seen the post !! but are you telling to avoid SRB on long term view or on listing gains???

Please clarify me on that ?

I want to apply it for Listing Gains !! ... am i making a wrong decision. please suggest and guide me.

Regards,
kunal; July 11, 2005
Rajesh Soni said...: Once again , Thanks to all for your appreciation.

I would request all visitors to mention their name and place in thier comments (goodies for those who do this in future!!!); July 11, 2005
Rajesh Soni said...: Dear anonymous,
You entered the stock at alittle higher valuations. If you are long term investor, continue to hold.This stock has tremendous potential , but no doubt you could have bought it at a lesser price.
All the best
Cheers!; July 11, 2005
Rajesh Soni said...: I would not eneter this stock even for listing gains !
I have some parameters to qualify a stock even for listing gains.

because at the end of the day, we are playing with our hard earned money.
There are immense opportunitites in the market that keep on coming and going...

So if a stock doesn't impress me, I would not go for it even if it eventually give gains.; July 11, 2005
Rahul Munjal said...: Do you mean that it may give us listing gains and we should apply for it if we have enough spare funds??

I have enough funds to apply for minimum amount for this ipo....

Should i apply????; July 13, 2005