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Review By Dilip Davda on September 12, 2020
• AIL is in the business of power related products and solutions.
• It has posted inconsistency in its top and bottom lines for the last three fiscals.
• The issue is priced exorbitantly at around 48 P/E against an industry average of 11.
• Lead Manager has no track record and this is the first mandate from its stable.
• This issue is fully structured (based on issue expenses) and expected to sail through.
ABOUT COMPANY:
Advait Infratech Ltd. (AIL) is into the business of providing products and solutions for power transmission, power substation and telecommunication infrastructure fields. It operates with various verticals such as Turnkey Telecommunication Projects, Installation of the Power Transmission, Sub Station and Telecom Products, Liasioning-marketing and providing end to end solutions for the overseas customers operating in the field Power Transmission and Sub Station, Trading of the similar products, and manufacturing through OEM of the stringing Tools.
AIL has expanded its verticals by venturing into manufacturing of OPGW (Optical Fibre Ground Wire) and OFC Cables. The Company has put up a manufacturing company, TG Advait India Private Limited through a joint venture with Jiangsu Tongguang Optical Fiber Cable Co. Ltd.
ISSUE DETAILS/CAPITAL HISTORY:
To meets its working capital (Rs. 4.65 cr.) and general corpus find (Rs. 1.54 cr.) needs, AIL is coming out with a maiden IPO of 1350000 equity shares of Rs.10 each at a fixed price of Rs. 51 per share to mobilize Rs. 6.89 cr. The issue opens for subscription on September 15, 2020, and will close on September 18, 2020. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME platform.
Issue constitutes 26.47% of the post issue paid-up capital of the company. The company will be spending Rs. 0.70 cr. for this IPO process. The issue is solely lead managed by ISK Advisors Pvt. Ltd. and KFin Technologies Pvt. Ltd. is the registrar to the issue. NNM Securities Pvt. Ltd. is acting as a Market Maker for this company. Having raised initial equity at par, AIL issued bonus shares in the ratio of 374 shares for 1 share held in March 2019.
The average cost of acquisition of shares by the promoters is Rs.0.02 and Rs. 0.06 per share. Post issue, AIL's current paid-up equity capital of Rs. 3.75 cr. will stand enhanced to Rs.5.10 cr. With this IPO, the company is looking for a market cap of Rs. 26.01 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, AIL has, on a consolidated basis, posted total revenue/net profits of Rs. 45.32 cr. / Rs. 6.21 cr. (FY18), Rs. 28.52 cr. / Rs. 2.49 cr. (FY19) and Rs. 45.81 cr. / Rs. 0.54 cr. (FY20). Thus it has shown inconsistency in its top and bottom lines.
For the last three fiscals, AIL has posted an average negative EPS of Rs. 5.69 and average RoNW of 12.14%. The issue is priced at a P/BV of around 1 based on its NAV of Rs. 51.65 as on March 31, 2020, and post-issue NAV of 51.48.
If we attribute FY20 earnings on fully diluted post issue equity, then asking price is at a P/E of around 48.11, making it an exorbitantly priced offer against industry segment P/E of around 11.
COMPARISION WITH LISTED PEERS:
As per offer documents, AIL has no listed peers to compare with.
MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's performance front, this is the maiden mandate from its platform and has no track records.
Review By Dilip Davda on September 12, 2020
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. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. 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 their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About 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.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Advait Infratech Limited offers an early investment opportunity in Advait Infratech Limited. A stock market investor can buy Advait Infratech SME IPO shares by applying in IPO before Advait Infratech Limited shares get listed at the stock exchanges. An investor could invest in Advait Infratech SME IPO for short term listing gain or a long term.
Read the Advait Infratech SME IPO recommendations by the leading analyst and leading stock brokers.
Advait Infratech SME IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Advait Infratech SME IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Advait Infratech SME IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Advait Infratech SME IPO.
The Advait Infratech SME IPO allotment status will be available on or around September 25, 2020. The allotted shares will be credited in demat account by September 29, 2020. Visit Advait Infratech SME IPO allotment status to check.
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