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AKI India BSE SME IPO review (Others)

Review By Dilip Davda on Sep 27, 2018

•    Aki is in the business of leather goods manufacturing and marketing.
•    Its financial data so far is average.
•    LM has poor track records.
•    Investment may be considered at your own risk.

AKI India Ltd. (AKI) is engaged in the activities of producing and export of saddlery goods, services of the leather shoes and trading of leather chemicals at domestic level. Changing economic scenario and business conditions, evolving consumer preferences, rapid technological innovations and adoption and globalization are driving it to transform the manner in which the company operates. AKI’s core competencies are its in-house technical knowledge, skilled workforce, diversified product portfolio which enable it to meet varied client requirements. The Company deals in all kinds of footwear’s leather accessories. AKI operates through two distinct business verticals, retail and distribution, each with its predominantly own customer base, sale channels and product range.

To part finance its working capital and general corpus fund needs, AKI is coming out with a maiden IPO of 2800000 equity shares of Rs. 10 each at a fixed price of Rs. 11 per share to mobilize Rs. 3.08 cr. Issue opens for subscription on 28.09.18 and will close on 03.10.18. Minimum application is to be made for 10000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 27.19% of the post issue paid up capital of the company. Issue is solely lead managed by Finshore Management Services Pvt. Ltd. while Link Intime India Pvt. Ltd. is the registrar to the issue. It has issued entire equity at par and a bonus issue in the ratio of 1 for 2 in December 2017. Average cost of acquisition of shares by the promoters is Rs. 6.67 per share. Post issue, AJI’s current paid up equity capital of Rs. 7.50 cr. will stand enhanced to Rs. 10.30 cr.

On performance front, for last four fiscals, AKI has (on a consolidated basis) posted turnover/net profits of Rs. 35.01 cr. / Rs. – (1.08) cr. (FY15), Rs. 42.37 cr. / Rs. 0.17 cr. (FY16), Rs. 43.45 cr. / Rs. 0.11 cr. (FY17) and Rs. 49.13 cr. / Rs. 1.11 cr.  (FY18). Thus in FY18 it cleared its carried forward losses and had some surplus. For last three fiscals, it has posted an average EPS of Rs. 0.71 and an average RoNW of 9.33%. Issue is priced at a P/BV of 1.14 on the basis of its NAV of Rs. 9.66 and at a P/BV of 1.10 based on its post issue NAV of Rs. 10.03. If we consider FY18 earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 10.

As per offer documents, it has shown Mirza Int’l., Bhartiya Int’l., and Super Tannery as its listed peers that are currently trading at a P/Es of around xx, xx and xx (as on 27.09.18). However, none of them are strictly comparable with this company.

On merchant banker’s front, this is the 4th mandate from its stable in last three years. Out of last 3 listings, 2 opened at discount and the 1 with a premium of about 0.2%. Thus it has poor track records.

Conclusion / Investment Strategy

Although issue appears reasonably priced, considering its average financial data and poor track record of LM, cash surplus, risk savvy investors may consider investment at their own risk.

Reviewer not sure about the issue.

Review By Dilip Davda on Sep 27, 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 prior to making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

About Dilip Davda

Dilip Davda, a freelance journalist

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.


The AKI India IPO Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered IPO Analysts tells you if AKI India IPO worth investing. The AKI India IPO Note sets the IPO expectations in systematic way which tells you if AKI India IPO good to buy (good or bad / yes or no). The IPO Forecast tells you weather to invest in AKI India IPO by providing IPO recommendations i.e. subscribe, avoid and neutral.


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