Refex Refrigerants -IPO prospects

Refex Refrigerants:

Refex Refrigerants, a company engaged in the business of refilling non ozone depleting refrigerant gases, or hydrofluorocarbons (HFCs) proposes to enter the capital market with a public issue of 38 lakh equity shares of Rs 10 each at a premium of Rs 55 per share

IPO Period: July 23 to July 26
Price Range :Rs.65
Minimum Share Lot: 100 Shares
Recommnedation: Skip /Subscribe -only if you have an extra cash in your account
Grade: Average - Hold for Long term

Comments:

Refex is a good and very small issue, come out with fixed price band. It is expected to list with Rs 14-15 premium but people should avoid the issue as there are numbers of issues available in the market.
The future of the HFC gas is very bright, but the company would have competition from local manufacturers. Due to huge infrastructure cost, the margins of the company would always be under pressure. About 80% is the cost of raw material for the company. If trading turnover is removed, the increase in topline in FY 08 won’t be significant. High equity base of Rs.15.20 crores would also be a dampner.
Considering the trading and service nature of business, the issue has very limited room for appreciation.

Premium on Listing: 15 -20%*