Innovative Tyres & Tubes Ltd

Started in 1995, Innovative tyres & tubes ltd manufactures and sells bias tires in India. The company offers tires for motorcycles, scooters, three-wheelers, passenger vehicles, light-trucks, trucks, buses, and special purpose vehicles as well as tubes. They sell their products under the brand "Innovative". Innovative's product range covers all highway sizes, Off The Road (OTR) highway sizes, agriculture and industrial tyres. They serves original equipment manufacturers. The company also exports its products to the Philippines, the United Arab Emirates, Peru, Latin America, etc. Company's plant is located at Halol, in Gujarat. ITTL has strong business relationship with tyre major Ceat Ltd. Company is manufacturing all segments of Nylon Tyres. Company is catering to domestic markets/after sales market, OEMs and is also exporting its products. On performance front, ITTL has posted turnover/net profits of Rs. 126.58 cr. / Rs. 2.26 cr. (FY14), Rs. 130.52 cr. / Rs. 4.12 cr. (FY15), Rs. 125.90 cr. / Rs. 1.89 cr. (FY16) and Rs. 132.54 cr. / Rs. 4.08 cr. (FY17). Thus it has seen see-saw mode in top and bottom lines for last four fiscals. For last three fiscals, it has posted an average EPS of Rs. 3.15 and average RoNW of 8.24%. Issue is priced at a P/BV of 1.15. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 19 plus. Peers are trading at a P/E ranging 17 to 21 as shown in the prospectus. Thus issue is fully priced. On merchant banker’s front, this is the 47th mandate from Pantomath in last three years. Out of last 10 recent listings, 1 opened at discount, 1 at par and the rest with 1 to 18% premium on IPO price. As per financials, company is not showing growth, RoNW is 8.24% for last three fiscals and issue is fully priced. So we give NEUTRAL rating to this SME IPO.

• 1 Mukesh Desai
• 2 Pradeep Kothari