I have applied with full force in the recently closed IPO of Sheela Foam the makers of Sleepwell brand of mattresses and industrail foams due to following reasons
1) Highly Ethical promoters enjoying stellar reputation.All their vendors get payment through RTGS on the promised date without any follow up.
2) V well educated promoters from IIT ,RPI & Purdue University(2nd Gen) with superb execution track record over last 40-45 years.
3) Huge opp size .Its Indias leading brand in a sector where unorganized sector still has 70% market share implying huge opp for organized players thanks to Demonetization & proposed GST.Organized players are already growing at the rate of 11-13% vs vs 6-8% and taking market share away from unorgnized players
4) Negative working capital
5) Reasonable PE of 25-27 for FY 17 for almost zero debt(DE-0.2) branded FMCG play
6) Asset turnover of 5.2 & Receivable days of 28 days
7) Invested capital has shrunk by 33% in 4 years while sales have gone up by 50%
8) Ronw has improved form 14.6% to 31 & EPS to 22 from 5.7 in last 3-4 years
9) IPO came at approx 3500 Cr mktcap vs proposed 4000 Cr Mkt thanks to DeMo fears
10) Australian subsidiary Joyce foams give sits tech edge in making better quality mattresses
11) Co has started taking more frequent price hikes & discounts to channels gradually being reduced.Mix also improving every year.
12) Existing block can sustain 30% higher sales every year
13) Also operates in B2B business where again opp size is huge like in sectors like Auto seats,Bra cups,Insulation etc
14) High quality anchor investors like GS,MS,Premji Investment,Fidelity,Kuwait Govt and a host of MFs like HDFC Icici Sundaram,Kotak,IDFC
15) QIB portion oversubscribed 16 times & firm allotment in retail category
16) Main competitors Kurlon performing poorly & is on block as per grapewine
16) Risks remain delay in GST implementation,impact of Demonetization in short term,RM volatality.
Enclosed Angel broking &HDFC sec report covers main point about Sheela Foams nicely.