Abhishek Integrations NSE SME IPO review (Avoid)

• IPO Details
• Stock Price
• Docs
  • RHP
  • DRHP
• Reviews
• Subscription
• Calculator
• News
• GMP
• Allotment
• BoA
• Messages

Review By Dilip Davda on June 5, 2021

•    AIL is a job contractor providing various services at Airports.
•    The financial data is at a minuscule level so far.
•    The issue is exorbitantly priced based on earnings and other relevant parameters.
•    Investors may ignore this IPO being a costly offer.

ABOUT COMPANY:
Abhishek Integrations Ltd. (AIL) is established by the takeover of the business of sole proprietorship company of promoters. It was engaged in the developing, operating and maintaining of electrical and mechanical installation of various Airports in India. Currently, it operates as a 'CLASS A' Gujarat Government approved contractor with a team of around 490 employees. In addition, the company is also providing Fire Fighting solutions, perimeter light fittings etc.  At present, it has 22 projects on hand of AAI at various locations on the domestic front and is also awarded a similar contract for Port Blair-South Andaman.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital requirements (Rs. 3.30 cr.) and general corpus fund needs (Rs. 1.15 cr.), AIL is coming out with a maiden IPO of 990000 equity shares of Rs. 10 each at a fixed price of Rs. 50 per share to mobilize Rs. 4.95 cr. The issue opens for subscription on June 08, 2021, and will close on June 11, 2021. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on the NSE SME Emerge platform. Issue constitutes 32.88% of the post issue paid-up equity capital of the company. AIL will spend around Rs. 0.50 cr. For this IPO process.

The issue is solely lead managed by Beeline Broking Ltd. and Link Intime India Pvt. Ltd. Is the registrar to the issue.  Nikunj Stock Brokers Ltd. is the market maker for this issue.

AIL has issued initial equity at par and raised further equity in the price range of Rs. 13 to Rs. 50 between January 07, 2021, and March 06, 2021. It has also issued bonus shares in the ratio of 2 for 1 in March 2021. The average cost of acquisition of shares by the promoters is Rs. 13.87 per share.

Post issue, its current paid-up equity capital of Rs. 2.02 cr., will stand enhanced to Rs. 3.01 cr. With the IPO pricing, the company is looking at a market cap of Rs. 15.05 cr. As of the date of filing the prospectus, it has just 8 shareholders.

FINANCIAL PERFORMANCE:
On the financial performance front, AIL has posted turnover/net profits of Rs. 0.06 cr. / Rs. 0.002 cr. (FY19), Rs. 0.73 cr. / Rs. 0.03 cr. (FY20) and Rs. 2.36 cr. / Rs. 0.12 cr. (FY21). Though it has shown growth in its top and bottom lines, it is at a minuscule level.

For the last three fiscals, the company has posted an average EPS of 0.74 and an average RoNW of 8.8%. The issue is priced at a P/BV of 3.56 based on its NAV of Rs. 14.05 as of March 31, 2021, and at a P/BV of 2.07 based on its post-issue NAV of Rs. 24.21.

If we consider FY21 earnings and attribute it to fully diluted post issue equity, then the asking price is at a P/E of around 125 thus making it an exorbitantly priced offer.

COMPARISON WITH LISTED PEERS:
As per the offer documents filed, AIL has shown Ranjeet Mechatronics as its listed peer which is trading at a P/E of around 10.3 (as per the last quote of April 09, 2021). However, it is not fully comparable on an apple to apple basis. The peer is way ahead in top line and also quoting at very low P/E.

MERCHANT BANKER'S PERFORMANCE:
This is the eighth mandate from Beeline Broking Ltd. Out of the last 7 listings, 1 opened at discount, 1 at par and the rest with premiums ranging between 1.37% to 10% on a listing day. Thus it has an average track record.

Abhishek Integrations IPO FAQs