Some observations from RHP: 1. The revenue and profit increased by 10 times as compared to last year. 2. PE looks slightly on the higher side as comapred to the issue price. 3. The LM has a mixed performance in last IPOs. 4. There has been delay in statutory compliances by the comapny on few occasions. 5. Cash Flow from operating activities is in negative in last 2-3 years. 6. The statutory auditors have been changed 3-4 times in last 3 years. 7. Capacity utilization is just 66%. 8. Totally dependent on top 10 customers for revenue.
Does not look like a promising IPO. But one can consider according to the risk management.
31. Finexpert| Link| Bookmark|
October 20, 2023 12:09:02 PM
Top Contributor (400+ Posts, 200+ Likes)
Mind Says do not apply, Heart Says Apply, jo hoga dekha gayega...
SMEs are so unpredictable... KYA KAROON KYA NA KAROON
22. YBPK| Link| Bookmark|
October 18, 2023 2:17:04 PM
Top Contributor (200+ Posts, 600+ Likes)
LM with decent track record. Anchor book with usual VC /PE investors. Company is engaged into manufacturing of Castor Oil, Castor Seed, Castor Oil cake, High Protein Oil cake. It’s plant is located in North Gujarat which is a major castor seed producing area. It buys the seeds directly from farmers and from Mandi’s while its sales are to traders. Material cost came down from 94.5% of sales to 93.5% in Q1FY24. High material cost shows that the company is operating in a highly commoditized business where neither the sale price nor the buying price is within its control. Top 5 customers make up 60% of sales while top 5 suppliers make up 78% of revenue. This shows that it is operating mainly as a job worker / contract processing unit with very low value addition and is earning only the processing charge. For this it has to take the risk of high inventory, high receivables and price fluctuation. Related party transactions show that in 22-23, purchases of Rs 84 cr (21 % of total consumption) and sales of Rs 142 cr (30% of total sales) are with related parties. Other current assets include Rs 27 cr advance given to suppliers, as on Q1FY24. So the company is working on 2% NP margin, its borrowing is at 11.5% to 13.1% and is giving interest free advance to suppliers. In The issue proceeds, Rs 29.92 cr will be used to partly meet working capital requirements of Rs 99.61 cr. Balance to be funded by internal accruals and more borrowings. Capacity utilisation was 68% in 22-23 and 73% for Q1FY24. Horrible cash flow for 22-23 and Q1YFY24, because of increase in inventories and receivables. For the last 15 months, PBT is Rs 7.47 cr while CFOB4T is Rs - 44.25 cr (negative). In 21-22, company received advance from customer of Rs 16 cr which skewed the cash flow. This appears to be a one time receipt as such advance is not seen in later years. As of 30-Jun-23, out of receivables of Rs 16.23 cr, Rs 52 lacs is due for over 6 months Based on working capital projections, company is targeting revenue of Rs 762 cr for 23-24, a 78% jump over 22-23. Given that 22-23 capacity utilisation was 68% and assuming no price increase and no capacity increase, 23-24 capacity utilisation will be 121%. Other assumption is company is expecting a 20-25% price increase. As on 31-July-23, company had 60 employees while as per EPFO, company deposited PF of 51 employees for Aug-23 and 47 employees for Aug-22. Other expenses for Q1FY24 seem to be proportionate to FY22-23. Freight + Loading & Unloading was Rs 483/ton in 22-23 but dropped to Rs 399/ton in Q1FY24. While fuel prices are going up how this reduction happened is a mystery. Chemical and consumables cost was Rs 2.47 cr in 22-23 and Rs 14.4 lacs in Q1FY24. Bank borrowings are @ 11.5% to 13.1% while unsecured borrowing of Rs 3.2 cr from promoters is interest free
22.1. G profit| Link| Bookmark|
October 18, 2023 7:33:44 PM
IPO Mentor (1000+ Posts, 200+ Likes)
Good analysis.
21. G profit| Link| Bookmark|
October 18, 2023 7:32:47 PM
IPO Mentor (1000+ Posts, 200+ Likes)
@Noorul This first interaction with you. Do you still think it's risk free and one should apply. Not an easy allotment. You know that I am small investor and less risk appetite. Please reply if possible upto 14.50, if you read this post before that time. Thanks.
PE is the price to earning ratio. Price of the stock divided by EPS (Earning per share). Example Total profit Rs 100 with number of share say 100. So EPS is Re 1. Share price say Rs 50, so pe is 50. Now if company issue fresh 100 shares than EPS will be profit Rs 100 with number of shares 200. So EPS is Re 0.5 and with share price Rs 50 post pe will be 100.
In that case, post issue PE should be more whereas in Women Cart issue, PE is 50 and post PE is 14. Why is it so ? Please clarify...
19. Smile✍️| Link| Bookmark|
October 17, 2023 4:02:28 PM
IPO Guru (1500+ Posts, 800+ Likes)
QIBs more than 10x on day one are quite suspicious total bids for 1,85,37,000 shares till now by QIBs, in them Foreign Institutional Investors(FIIs) - NIL Domestic Financial Institutions - NIL Mutual funds - NIL Bids by Others - 1,85,37,000 who are these others, may be promoters LM, MM itself.