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Accuracy Shipping NSE SME IPO review (May apply)

Review By Dilip Davda on Jun 5, 2018

Accuracy Shipping Ltd. (ASL) is a third party logistics solutions provider. It offers customized and end-to-end logistics solutions and services including transportation and distribution, freight forwarding, clearing and forwarding service, custom house clearance, warehousing and value added services to clients. ASL is also engaged in handling of project cargo, which is a specialized activity requiring detailed planning and technical expertise. The comprehensive project handling service includes designing and execution of customized solutions tailored to meet specific customer requirements for the transport of high value specialized equipments from one location to another using multiple modes of transport. As a multimodal transport operator, company offers end-to-end freight services for export and import cargo utilizing multiple modes of transport such as sea, road, rail and air. Simply going by the name of the company, it misleads as a shipping company, a sector which is not in good shape.

ASL operates through a PAN India network consisting of a registered office at Gandhidham, 5 branch offices and over 1,300 clients as at January 31, 2018. In addition to using hired fleets, it also has a fleet of more than 150 vehicles to meet inland transportation requirements. It also has a network of various business partners providing vehicles, warehouses and other assets and services for company’s business. At present it is offering services through business partners in over more than 35 countries mainly from South Africa, Egypt, Turkey, Italy, Colombo, etc.

To part finance repayment/prepayment of certain debts, purchase of Goods Transportation Vehicles, working capital and general corpus fund needs, ASL is coming out with a maiden IPO of 4257600 equity shares (net of pre-IPO placement of 678400 shares amounting to Rs. 5.70 crore) of Rs. 10 each via book building route with a price band of Rs. 81 – Rs. 84 to mobilize Rs. 34.49 cr. to Rs. 35.76 cr. (based on lower and upper price bands). Issue opens for subscription on 11.06.18 and will close on 14.06.18. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Having raised initial equity at par, it raised further equity at a price of Rs. 84 per share. Issue (including pre-IPO placement) constitutes 32.80% of post issue paid up capital of the company. Average cost of acquisition of shares by the promoters is Rs. 6.41 and Rs. 10 per share. Post issue, its current paid up equity capital of Rs. 10.80 cr. (including pre-IPO placement at Rs. 84 in the month of May 2018) will stand enhanced to Rs. 15.06 cr.(Approx).

On performance front, for last four fiscals, ASL has posted turnover/net profits of Rs. 97.39 cr. / Rs. 0.62 cr. (FY14), Rs. 161.66 cr. / Rs. 0.32 cr. (FY15), Rs. 170.79 cr. / Rs. 1.07 cr. (FY16) and Rs. 201.29 cr. / Rs. 1.96 cr. (FY17). For first nine months ended on 31.12.17 of FY18 it has earned net profit of Rs. 6.82 cr. on a turnover of Rs. 266.53 cr. Thus for 9 months of FY 18 it has shown superb performance with spurt in top line and record net profits, which raises concern. For FY 15 it suffered a setback in bottom line despite improved top line. For last three fiscals it has posted an average EPS of Rs. 5.53 and an average RoNW of 16.27%. Issue is priced at a P/BV of 4 based on its NAV of Rs. 21.03 as on 31.12.17. Based on super profits of FY18 (9 months), if we annualize and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 13 plus. But whether company will be able to report such superb performance going forward is a million dollar question. As per offer documents it has shown Tiger Logistics, Allcargo Logistics, Sical Logistics and Total Transport Syst as its listed peers that are trading at a P/E of around 18, 16, 29 and 10 respectively (as on 05.06.18). They are not comparable with this company in a strict manner. As on 31.12.17 its debt-equity ratio was 2.04%.

On merchant banker’s front, this is 73rd mandate from its stable in last four fiscals. Out of last 10 listings, 1 opened at par and 9 with a premium ranging from 1.59% to 20% on the day of listing.


Conclusion / Investment Strategy

Although based on superb performance for 9 months of FY18, on prima facie, it appears reasonably priced; sustainability of such performance raises concern. Hence cash surplus investors may consider investment at their own risk.

Review By Dilip Davda on Jun 5, 2018

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

Accuracy Shipping IPO FAQs

  1. 1. Why Accuracy Shipping IPO?

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

  2. 2. How is Accuracy Shipping IPO?

    Read the Accuracy Shipping IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Accuracy Shipping IPO what should investors do?

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

  4. 4. Is Accuracy Shipping IPO good?

    Our recommendation for Accuracy Shipping IPO is to subscribe for long term.

  5. 5. Is Accuracy Shipping IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Accuracy Shipping IPO.

  6. 6. When will Accuracy Shipping IPO allotment status?

    The Accuracy Shipping IPO allotment status will be available on or around Jun 19, 2018. The allotted shares will be credited in demat account by Jun 21, 2018. Visit Accuracy Shipping IPO allotment status to check.

  7. 7. When will Accuracy Shipping IPO list?

    The Accuracy Shipping IPO will list on Friday, June 22, 2018, at NSE SME.