FINANCE & STOCK ADVICE: IPO : "20 MICRON" -A BAD INVESTMENT IDEA

With a public issue of 43.51 lakh equity shares of Rs.10 each, in the band of Rs.50 to 55 per share , 20 Microns is entering the capital market on 8^th Sep 2008, with offer for sale of 26.76 lakh shares.

The company is into mining and mineral business with its plants located at Rajasthan , Gujarat & Tamil Nadu. Financial Year 2008 topline of the company was at Rs.108 crores, which includes trading turnover of Rs.38 crores. Net profit for the year was at Rs.4.59 crores, with an EPS of Rs.3.69 (Appx).

Issue of 16.75 lakh shares even at the upper band of R.55, it would be able to accumultae Rs.9.20 crores . This would be used to finance the ongoing expansion at five places, estimated to have an outlay of Rs.19.20 crores, including issue expenses and general corporate purposes. Rs.10 crores is being mobilized as a term loan from IDBI.

Financial situation as at 31.03-08 has not been very good. Inspite of gross block of Rs.76 crores as at 31-03-08, the turnover of the company for FY 08 was just Rs.69 crores. Debt of the company was at Rs.46.51 crores on a net worth of Rs.28.20 crores, resulting in a Debt equity ratio of 1.65 to 1. Even expansion is being carried out on an estimated debt equity of over 1:1. Post issue, equity of the company, will rise to Rs.14.12 crores with promoters stake of 43% only.

Present issue, even if considered at the lower band of Rs.50, is being made at a PE ratio in double digit, which is definitely very high.

It Could be finally concluded that investment in this stock would be a bad idea.

MULTI BAGGER STOCK GROUP

Some of my group's multi bagger picks during the rally were NMDC , MMTC , STC , Larsen ,Jindal Steel & Power , Unitech , BF Utilities , Jai Corporation , Walchand Nagar Industries, RNRL , Reliance Infra (Reliance Energy) etc.

I had been long associated with a corporate engaged in financial services , where with the assistance of specialized tools along with my special analysis as per some historical accepted theories of stock market like W. D. GANN's Theory , Elliot Wave Theory and others are used with reliable insider information of so called " operators" who play a major role to make a stock ,a Multi Bagger ,I do make my gem picks in this market.

I had been running my group , where the associated people get the reliable and most beneficial to get the unexpected return as seen in the above mentioned tips. Say for example the stock called MMTC had jumped from 2000 level to 56000 per share of historical price where the capital appreciated by 28 times in very short period with 2700% return on capital employed. Likewise in RNRL we started accumulating at RS 25 level from where we saw it moving at 250 level giving 10 times with 900% return.

These sort of return is helpful as ,

1. Handsome gain will make a jack to our capital.

2. Limited stocks trade , as daily trade could be avoided , which is more risky.

3. Long term capital gain , so no tax liability.

4. Whole income in white, which could be further deposited into fixed deposit to get assured monthly income later.

5. Strong income tax file without paying any taxes.

Our role here could be summarized as :

1. Giving tips to all registered member at proper time , when the stock is just about to take off, neither too early not too late.

2. Make sure investor do not gt stuck into it.

3. Recommend to exit when the operator is about to leave it.which is the most important work or else the whole accumulated and deemed profit will be washed away along with part of investment and will remain stuck for long - long period.


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IPO : "20 MICRON" -A BAD INVESTMENT IDEA