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Aarvi Encon NSE SME IPO review (Apply)

Review By Dilip Davda on Sep 20, 2017

Aarvi Encon Ltd. (AEL) is a human resources service company offering people solutions to businesses. AEL delivers unparalleled level of world class Engineering and Manpower Outsourcing services with an intimate understanding of the Indian Economy and business environment. Manpower is the most crucial asset of any organization. Company is providing services to corporate in Oil & Gas, Power, Refinery/Petrochemicals, Pipeline, Infrastructure sectors in India and abroad. Cllient list included Reliance Industries, Cairn India, HPCL Mittal, Bechtel etc.

To part finance working capital, acquisitions and strategic initiatives, general corpus fund needs, AEL is coming out with a maiden IPO of 3934000 equity shares of Rs. 10 each with a fixed price of Rs. 54 per share to mobilize Rs. 21.24 crore. Issue opens for subscription on 21.09.17 and will close on 26.09.17. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Sarthi Capital Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.61% of the post issue paid up capital of the company. Cost of acquisition by promoters is just around Rs. 0.12 per share. It has issued entire equity at par and also bonus shares in the ratio of 30 for 1 in March 2009 and 5 for 2 in July 2017. Post issue, its current paid up equity capital of Rs. 10.85 crore will stand enhanced to Rs. 14.78 crore.

On performance front, AEL has (on consolidated basis) reported turnover/net profits of Rs.Rs. 99.16 cr. / Rs. 4.73 cr. (FY14), Rs. 115.61 cr. / Rs. 6.42 cr. (FY15), Rs. 110.77 cr. / Rs. 2.53 cr. (FY16) and Rs. 153.51 cr. / Rs. 5.34 cr. (FY17). Thus it suffered a setback for FY16 and also pressure on margins for FY17. For last three fiscals, it has posted an average EPS of Rs. 4.22 and RoNW of 14.13 % (on the paid up equity capital of Rs. 3.10 crore). Issue is priced at a P/BV of Rs. 1.65. If we attribute latest earnings on fully diluted post issue equity then asking price is at a P/E of around 15 against peers trading at a P/ E of 36 to 100. Thus issue pricing appears reasonable.

On merchant banker’s front, this is the 32nd mandate from its stable and out of last 10 listings 2 got listed at discount, 1 at par, and the balance 7 with a premium ranging from 3 to 131 per cent on the day of listing.

Conclusion: Considering reasonable pricing, investment may be considered for medium to long term.


Conclusion / Investment Strategy

Considering reasonable pricing, investment may be considered for medium to long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Sep 20, 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

Aarvi Encon IPO FAQs

  1. 1. Why Aarvi Encon IPO?

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

  2. 2. How is Aarvi Encon IPO?

    Read the Aarvi Encon IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Aarvi Encon IPO what should investors do?

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

  4. 4. Is Aarvi Encon IPO good?

    Our recommendation for Aarvi Encon IPO is to subscribe.

  5. 5. Is Aarvi Encon IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Aarvi Encon IPO.

  6. 6. When will Aarvi Encon IPO allotment status?

    The Aarvi Encon IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Aarvi Encon IPO allotment status to check.

  7. 7. When will Aarvi Encon IPO list?

    The Aarvi Encon IPO will list on Thursday, October 5, 2017, at NSE SME.