SRS Limited IPO

SRS Limited IPO.

Incorporated in 2000, SRS Limited is engaged in the business of Cinema Exhibition, Food & Beverages, Retail and Manufacturing & Retailing of Jewellery operations.

This IPO proceeds will be used for setting up of cinemas, setting up of food courts and restaurants, setting up of retail stores, setting up of jewellery manufacturing facility and jewellery retail stores, general corporate purposes and issue related expenses.

The equity shares offered through the IPO are proposed to be listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Objects of the Issue:

The objects of this Public Issue are to raise funds for:

1. Setting up of cinemas;
2. Setting up of food courts and restaurants;
3. Setting up of retail stores;
4. Setting up of jewellery manufacturing facility and jewellery retail stores;
5. General Corporate Purposes; and
6. Issue related expenses.

BRLM: Karvy/ IDBI Capital/ SPA Sec

Syndicate: ENAM/ SMC Sec/ HEM Sec

Issue Period: August, 23– August, 26 2011

Price Band: Will be announced two working days prior to the issue opens

Lot Size: Will be announced two working days prior to the issue opens

Registrar: Beetal Financial & Computer Services Private Limited.

 Retail Appl Size: Rs.2,00,000/-

Issue Size: 3,50,00,000 Equity Shares aggregating to a sum of Rs. 203.00 - 227.50 Crore(Face Value Rs.10 each).

ICRA has assigned an IPO Grade 3 to SRS Limited IPO. This means as per ICRA, company has 'Average Fundamentals'. ICRA assigns IPO grading on a scale of 5 to 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals.

What is a stock split?

A Stock split is a process where in the company decides to reduce the face value of the outstanding shares. This is usually done only when the stock is in a strong uptrend and the board of the company has a   comfortable anticipation that the stock will continue the same trend further. When a stock is quoting high in the market, there are worries that there will be fewer takers for the stock implying lower liquidity to the shares of the company. By this exercise, the company tries to provide more liquidity to the stock in the market. More often than not the when a company declares a stock split it means that particular firm is experiencing success

Mechanics of stock split:

To do a stock split it is important to know the requirements before a stock split, as well as the general profile of the company which is announcing a split of their stock. Naturally the  company must have enough unissued authorized shares to split the stock and then the board of directors must then meet and declare a stock split. If authorized shares need to be added, then the company must seek approval from shareholders, which requires a shareholder meeting for a vote to support additional shares being issued. At that point the company can announce the stock split and both the split and recording dates are set. When the split date does indeed arrive, additional shares are issued and the stock price per share is adjusted accordingly.

The average profile of a company that declares a stock split is one that is currently operating with increasing revenue and net earnings.  Typically the stock price is close to or  higher than the price of the last split, is in a general uptrend and of course is expected to continue to move northwards.  In addition, business is forecasted to be very good going forward, shareholder confidence is high and basically no major legal issues are pending reconciliation. In addition, a stock split announcement is typically accompanied by other major events which could be anything such as a bonus, dividend being paid, a stock buyback program or even changes to management.

Stock splits usually attract the interest of the retail and institutional participants as they arecertainly worth monitoring and when correctly identified, they provide low risk and high reward options strategies. In fact, if you can see a stock split coming when implied volatility is currently very low, then these particular situations have a tremendous chance of being highly profitable when coupled with the appropriate options strategy.