So should you buy into the Roshan IPO or not?

by on January 11, 2017

roshan packages

Roshan Packing – being the first IPO has a lot of critics and analysts stating different things. Here are 10 things which you need to know before making a decision about whether you should buy the share of not:

  1. Roshan Packages was established on Aug 13th 2002 with an objective to provide high quality packaging for Roshan Enterprises, the fruit export company of the Roshan Group.
  2. Roshan Packages not only supply packaging for the exporters of fruits & vegetables but also supply packaging solutions to different large multinational & local corporations.
  3. Roshan Packages operates two principle manufacturing facilities located at 7KM Sundar Raiwand Lahore and other in Sundar Industrial estate Lahore.
  4. In 2016, Roshan Packages entered into a joint venture with china-based Shandong Yongtai Paper mills to establish Roshan Sun Tao Paper Mills to manufacture corrugated paper. This project is a subsidiary of Roshan Packages.
  5. The company is doing an initial public offering for expansion of its production facilities, in order to meet the expected increase in demand for packaging material produced by the company Rs 912,723,252, approx. 80%
  6. The Company is issuing 32,500,000 shares for IPO. Out of this 75% (24,375,000) shares will be offered through Book Building Process while 25% (8,125,000) shares will be issued to the General public through share applications.
  7. Registration date starts from Jan 12, 2017 (9AM ) and will close at 3PM on Jan 18, 2017
  8. The first quarter results of Sept 2016 showed earnings per share of Rs.1.12
  9. The profit after surplus stood at Rs 84 million
  10. To access the full application and prospectus you can visit: http://www.roshanpackages.com.pk/download-promotions/

Should you buy on the first day?

It is tempting to invest in IPOs but here are some reasons to think twice before you do so.

1. Most IPOs underperform in the long run.

2. It is hard to predict how much the price would rise the first day. Underpricing, the first day return, is not high as it seems on average.

3. Institutional investors flip the IPOs. They get in at low prices and make a quick buck and tend to sell out quickly.

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