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Ajooni Bio NSE SME IPO review (May apply)

Review By Dilip Davda on Dec 18, 2017

Ajooni Biotech Ltd. (ABL) is engaged in manufacturing, producing, processing and supplying of Cattle feed, Nutrients related to cattle feed and manufacturing & production of Animal health care supplements. It is registered with Department of Industries, Govt. of Punjab as Small Scale Industry (SSI) and also registered with Department of Dairy Development, Govt of Punjab. ABL has entered into an Agreement with Patanjali Gramudyog Nyas, Haridwar (PATANJALI) (a unit of Yog Guru Baba Ramdev) for manufacturing of Cattle feed and Distribution of Cattle feed and feed supplements in their brand of Patanjali with 100% buy back arrangement for supplies in the states of Punjab, Himachal Pradesh, some
parts of Jammu & Kashmir, Haryana and Rajasthan. Company is a paramount manufacturer and supplier of superior quality of PATANJALI SAMVRIDDHI, PATANJALI GARBHANJALI, PATANJALI BATISA-PRO etc. The products offered are processed using quality ingredients sourced from the trustworthy vendors of the market. ABL’s manufactured veterinary products find use in the treatment and cure of many diseases in animals.

To part finance its working capital and general corpus fund needs, ABL is coming out with a maiden IPO of 2196000 equity shares of Rs. 10 each at a fixed price of Rs. 30 per share to mobilize Rs. 6.59 crore. Issue opens for subscription on 20.12.17 and will close on 22.12.17. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment shares will be listed on NSE SME Emerge. Issue is solely lead managed by Navigant Corporate Advisors Ltd. and Cameo Corporate Services Ltd. is the registrar to the issue. Issue constitutes 37.51% of the post issue paid up capital of the company. The average cost of acquisition of the shares by the promoters ranging from Rs. 12.34 to Rs. 12.36 per share. After issuing equity shares at par on incorporation, it raised further equity in the price range of Rs. 15 to Rs. 30 per share between March 2014 and August 2017. It has also issued bonus shares in the ratio of 7 shares for every 4 shares held in August 2017. Post issue, its current paid up equity capital of Rs. 3.66 crore will stand enhanced to Rs. 5.86 crore.

On performance front, ABL has posted turnover/net profits of Rs. 7.22 cr. / Rs. 0.07 cr. (FY15), Rs. 13.23 cr. / Rs. 0.10 cr. (FY16) and Rs. 28.58 cr. / Rs. 0.28 cr. (FY16). Thus its top and bottom line has shown growing pattern. It has posted an average EPS of Rs. 2.35 and average RoNW of 23.48% on an equity base of Rs. 0.33 crore. For first five months ended on 31.08.17 it has earned net profit of Rs. 0.16 crore on a turnover of Rs. 13.94 crore. Issue is priced at a P/BV of 2.04 on the basis of its NAV as on 31.08.17 and at a P/BV of 1.71 on the basis of post issue NAV. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 45 plus against its peers (as mentioned in offer documents) like Avanti Feeds and Hatsun Agro trading at a P/E of around 35 and 87 respectively (as on 14.12.17). However, both these peers are not strictly comparable as they have varied activities. In fact Godrej Agrovet may be a nearest peer with similar activities having major share in their revenues. It is trading at a P/E of 62 plus. Issue appears fully priced and company is dependent on Patanjali for its major revenues.

On merchant banker’s front, this is the 9th mandate from its stable in past three years. Out of 8 listing so far, 3 opened at a discount, one at par and the rest with a premium ranging from 5 to 20% on the offer price on the day of listing.

Conclusion: Being fully priced issue, cash surplus risk savvy investors may consider investment for long term. (Other).


Conclusion / Investment Strategy

Being fully priced issue, cash surplus risk savvy investors may consider investment for long term. (Other).

Review By Dilip Davda on Dec 18, 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

Ajooni Biotech IPO FAQs

  1. 1. Why Ajooni Biotech IPO?

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

  2. 2. How is Ajooni Biotech IPO?

    Read the Ajooni Biotech IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Ajooni Biotech IPO what should investors do?

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

  4. 4. Is Ajooni Biotech IPO good?

    Our recommendation for Ajooni Biotech IPO is to subscribe for long term.

  5. 5. Is Ajooni Biotech IPO worth Investing?

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

  6. 6. When will Ajooni Biotech IPO allotment status?

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

  7. 7. When will Ajooni Biotech IPO list?

    The Ajooni Biotech IPO will list on Tuesday, January 2, 2018, at NSE SME.

3 Comments

3. Hyd shares  Dec 21, 2017 6:44:58 AM
I also got it. Thank you Dilip ji.
2. indravarma  Dec 20, 2017 6:31:57 PM
Hi Dilip ji,
0.58 is Eps for 5 Months (0.58/5=0.116 per month)
Annualized EPS is 1.39 (0.116*12)

PE Will be 21.5 (30/1.392)

Am I Wrong sir.

Will all due respect how did you 45.
2.1. indravarma  Dec 20, 2017 10:34:56 PM
I figured it out.
You are correct sir
1. Hyd shares  Dec 19, 2017 6:47:28 AM
It has posted an average EPS of Rs. 2.35 and price is Rs. 30. Then P/E should be 12.35. Correct me if I am wrong!
1.1. Dilip Davda  Dec 19, 2017 7:36:55 PM
EPS of Rs. 2.35 is on an old small equity base that jumps many fold post IPO. So please rework your statics