Abhishek Integrations NSE SME IPO review (Avoid)

Review By Dilip Davda on Jun 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.


Conclusion / Investment Strategy

Considering its minuscule financial performance and the market cap in relation to its top line, the issue is priced exorbitantly. On other parameters to it is highly overpriced. Hence, investors may ignore this issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jun 5, 2021

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

Abhishek Integrations IPO FAQs

  1. 1. Why Abhishek Integrations IPO?

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

  2. 2. How is Abhishek Integrations IPO?

    Read the Abhishek Integrations IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Abhishek Integrations IPO what should investors do?

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

  4. 4. Is Abhishek Integrations IPO good?

    Our recommendation for Abhishek Integrations IPO is to avoid.

  5. 5. Is Abhishek Integrations IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Abhishek Integrations IPO.

  6. 6. When will Abhishek Integrations IPO allotment status?

    The Abhishek Integrations IPO allotment status will be available on or around Jun 16, 2021. The allotted shares will be credited in demat account by Jun 17, 2021. Visit Abhishek Integrations IPO allotment status to check.

  7. 7. When will Abhishek Integrations IPO list?

    The Abhishek Integrations IPO list date is not yet available. The Abhishek Integrations IPO is planned to list on Jun 21, 2021, at NSE SME.

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