A & M Febcon BSE SME IPO review (Avoid)

Review By Dilip Davda on Aug 30, 2017

A&M Febcon Ltd (AMF) is engaged in the services of engineering which is applied to the planning, designing and control of industrial operations and in the business of Industrial equipment and metal fabrication. Industrial equipment fabrication is the most complex out of the three i.e. structural, commercial and industrial which is used primarily to develop industrial machinery. AMF's equipments and machineries are manufactured through industrial fabrication that include boilers, storage tanks, heat exchangers, columns, and towers etc, collectively called as process plant equipments. These process plant equipments are widely used in petrochemical plants, oil and gas refinery, metal industry, cement plants, pulp & paper manufacturing plants etc.

To part finance its working capital and general corporate funds needs, AMF is coming out with a maiden IPO of 3712000 equity shares of face value of Rs. 10 each at a fixed price of Rs. 18 per equity share to mobilize Rs. 6.68 crore. Issue opens for subscription on 01.09.17 and will close on 06.09.17. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Gretex Corporate Services Pvt. Ltd and Karvy Computershare Pvt. Ltd. is the registrar to the issue. The issue will constitute 40.56% of the post issue paid up equity share capital of the company. Since incorporation till December 2014 it issued entire equity at par. Thereafter it raised further equity at a price of Rs. 18 per share from January 2017 to March 2017 and also issued bonus shares in the ratio of 1 for 2. Post issue, its current paid up equity capital of Rs. 5.44 crore will stand enhanced to Rs. 9.15 crore.

On performance front, for last four fiscals AMF has posted turnover/net profits of Rs. 2.95 cr. / Rs. 0.01 cr. (FY14), Rs. 5.22 cr. / Rs. 0.04 cr. (FY15), Rs. 8.27 cr. / Rs. 0.03 cr. (FY16) and Rs. 10.01 cr. / Rs. 0.45 cr. (FY17). Thus a sudden jump in bottom line is seen for the concluded fiscal. If we attribute latest earnings on fully diluted equity post issue then asking price is at a P/E of 36 plus. Issue is priced at a P/BV of 1.2 and last three fiscal's average RoNW is 5.42%. Thus issue is highly priced and having no justification on performance parameters as well. As claimed by the management, it has no listed peers to compare with.

On merchant banker's front, this is the 6th mandate from its stable and out of last four listings two issues opened at discount, one at par and one with mere premium.

Conclusion: Considering track record and aggressive pricing, there is no harm in giving this IPO a miss.


Conclusion / Investment Strategy

Considering track record and aggressive pricing of A & M Febcon BSE SME IPO, there is no harm in giving this IPO a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Aug 30, 2017

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

A M Febcon FAQs

  1. 1. Why A M Febcon?

    The initial public offer (IPO) of A & M Febcon Ltd offers an early investment opportunity in A & M Febcon Ltd. A stock market investor can buy A M Febcon shares by applying in IPO before A & M Febcon Ltd shares get listed at the stock exchanges. An investor could invest in A M Febcon for short term listing gain or a long term.

  2. 2. How is A M Febcon?

    Read the A M Febcon recommendations by the leading analyst and leading stock brokers.

  3. 3. A M Febcon what should investors do?

    A M Febcon offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the A M Febcon Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is A M Febcon good?

    Our recommendation for A M Febcon is to avoid.

  5. 5. Is A M Febcon worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the A M Febcon.

  6. 6. When will A M Febcon allotment status?

    The A M Febcon allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit A M Febcon allotment status to check.

  7. 7. When will A M Febcon list?

    The A M Febcon will list on Thursday, September 14, 2017, at BSE SME.








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