One should know few things about Roman Tarmat IPO

We maintain a No signal for Roman Tarmat IPO. Reasons are

• The company has been taking the benefit of Section 80IA for the past two years. The effective tax rate for FY06 is 5.4% and that for 9m FY07 is 3.5%. With the benefit been taken away from the contractor companies like Roman Tarmat, the company's profitability will be adversely affected.
• Over 62% of the company's order book is constituted by two major orders. Thus, the visibility of revenue flows is limited going forward.
• Till date, the company has not bagged any orders from NHAI. The company mostly has small size orders (orders below Rs 1 billion) in its books. Thus, scalability of company's business remains a concern.
• A large proportion of company's revenue and order book is derived from low margins roads and highway segment.
• Keeping these in mind we firmly believe that the IPO is aggresively priced.

We advise to not go for this IPO, and probably after listing even after correction, don't opt for it. You'll find so many good stocks in secondary market to pick in.

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