Hascol Petroleum, Do not subscribe in IPO – SCS Research

SCS Research claims that the strike price of HASCOL petroleum is not justifiable. They have the stance to not to but HASCOL Petroleum in IPO on 8-9th April 2014.

By: Rajesh Kumar Maheshwari
111-111-721 Ext.116
Standard Capital Securities (Pvt) Ltd

During book building process carried on March 4 and March 5, 2014 the under writer has issued 18.75 million shares at strike price of Rs 56.5/sh (inclusive of share premium of Rs 46/sh)

Now remaining 6.25 mn ordinary shares (25% of total size) is being offered to general public through Initial Public Offering (IPO) at Rs56.5/sh (strike price determined through book building process). The IPO can be subscribed from April 08, 2014 to April 09, 2014 during banking hours.

Hascol financial highlights:

HPL is an oil marketing company with 210 outlets all over the Pakistan. During CY13 company reported net profit of Rs 391mn converting to basic EPS of Rs 5.96/sh (Diluted EPS of 4.32 as per our working). Furthermore during CY13 company’s net sales were doubled to Rs 49.2bn against Rs 25.9bn in CY12. Wherein gross profit and EBIT were reported as Rs 1.36bn and Rs 570mn respectively in CY13.

While comparing HPL with industry and other peers, we see that at this price (Rs 56.5/sh) HPL seems little expensive given premium price. Based on diluted EPS HPL yields expected PE of 11.3x which is much higher than the other peers and double of industry average expected PE of 5.8x. Likewise In term of PBV comparison HPL spells out higher PBV of 3.5x much higher than the industry average PBV of 1.5x.

At a premium of Rs 46.5/sh and given peer analysis PE analysis alongside future forecast – we signal investors not to subscribe the issue of HPL.

Comments

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3 Comments

  1. maqsood says:

    i need detail why i don not subcribe in ipo.

  2. Abid Yaqoob says:

    Dear sir

    plz tell me HPL IPO status how many application required and how many application submitted

    thank u for ur reply

    Abid Yaqoob

  3. zaffar ali memon says:

    please tell me expected result quarterly announcement for 31st march 2014 of hascol petroleum

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