SRS’ Financial Figures Are Difficult To Read
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SRS is not worth investing
Investors Have Burned Their Fingers And Hands
SRS has ended up with a loss of 42% on its debut day in the stock market. The Faridabad-based company opened at Rs.55 as against its offer price of Rs.58 and ended up at Rs.33.65. Nine crore shares changed hands on the debut day. SRS is a diversified entity having its presence in hotels, cinema exhibition, retail, jewellery and FMCG. The company’s IPO was subscribed 1.25 times in August 23 – 26, 2011. Non-institutional category of the IPO was subscribed by 5.11 times. Qualified institutional quota was subscribed by only 0.75 times. Retail individual investors’ quota was subscribed still lower at 0.32 times.
Expensive Public Issue
Even at the time of the public issue, it was very clear that it was an expensive issue and that investors should wait for the share to be listed and then buy it in secondary market. The company derives nearly three quarter of its revenue from the jewellery business. Nearly a quarter of the revenue comes from retailing. In the hotels business, SRS has 11 hotels with brands ‘Punjabi Haandi’ and ‘7dayz’. The company owns its SRS Value Bazaar for its FMCG business. The company has its own brand ‘SRS Jewells’ for selling gold and diamond jewelleries.
Jewellery And Retail Constitute Main Business Of The Company
During the IPO, the company planned to raise Rs.227 crore. Out of this amount, the company planned to set up 51 screens in 15 locations in North India at an investment cost of Rs.101 crore. Rs.40 crore was planned to be used for setting up food courts and restaurants, Rs.53 crore for setting up retail stores and Rs.16.7 crore for setting up jewellery stores and manufacturing units.
Difficult To Read The Figures
In 2010-11, the company posted a net profit of Rs.37.5 crore. Net profit was Rs.26 crore in the previous year. In 2010-11, the company posted a total income of Rs.2077 crore. Its debt equity ratio was at 0.43. The company’s IPO price was expensive compared to its peers Rajesh Exports and PVR. The company has issued a statutory advertisement in the newspapers informing its financial results for the second quarter of 2010-11. But the figures are so small that even a person with normal eyesight without any power problem cannot read the figures easily. This is a clever tactic adopted by the companies to hide their figures from the investors and general public. The figures published can be read only by using a lens. Most people do not have the patience and time to use a lens. The company sees big business of its activities in tier-2 and tier-3 cities. Investors are advised not to buy the company’s shares even at this reduced price of Rs.33.90 (NSE 17.02.12).
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