IPO Update : Hanung Toys and Textiles Limited

It’s not a child’s game

Hanung Toys and Textiles (hereafter called as ”HTTL ”) has entered the capital markets with a public issue of 95 Lac equity shares offered through book-building at a price band of Rs. 85-95. Investment Guru rates this issue as “Average” and recommends investors to apply with expectation of moderate listing gains.

Let’s dig into the issue highlights :

HTTL offers a combination of two business –Stuff toys and home furnishings.

HTTL has capacity of producing 1.1 Crore pcs. per year of stuff toys and furnishing unit with the capacity of manufacturing 12.5 Lac sets p.a. The textile processing unit has the capacity of processing 60 Lac meters p.a. and have the '16 color 108 inches wide' printing machine.

The company mainly exports to USA and Eurpoe (96% of total export). Company has also launched domestic Brands viz. "Play-n-Pets" and "Muskan" in stuff toys and "Splash" in home furnishing.

The issue proceeds will be used to set up an integrated home textile unit with a total cost of Rs 153.44 crore, which includes 72 air-jet looms with superior quality wider width weaving capacity of 21,000 meters per day and processing capacity of 1,05,000 meters per day The company also plans to part substitute its existing working capital requirement of Rs.15 crore.

The company has mentioned Duty Free Imports and Single Window Clearance, innovative Design and Development, Interest Cost Benefits, Established Domestic Network and Brands as its competitive strength.

Bennet, Coleman and Co has acquired 5 lakh equity shares at a price of Rs 150 per share constituting 1.99 per cent of the post issue equity share capital of the company.

Financials : Net Income from opretions has grown by 82% in Fy06 as compared to FY05. Net profit has seen a 215% growth in the same period.

The weighted average EPS for last three years comes to 11.47 which makes the offer price ata P/E of 7.4 – 8.3.

Weighted average Return on Networth comes to 17%. Net asset value per share is Rs. 45.72

The company prospectus mentions that there are no peers in Toy segment. Peers in Home furnishing are quoting in the P/E range of 7-17. Competitors generate return on networth in the range of 14-24%.

Issue Opens : 28-Sep-2006
Issue Closes : 05-Oct-2006
Registrar : Karvy


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m r kale