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Review By Dilip Davda on September 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.
ABOUT COMPANY:
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.
ISSUE DETAILS/CAPITAL HISTORY:
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.
FINANCIAL PERFORMANCE:
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.
COMPARE WITH LISTED PEERS:
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.
TRACK RECORD OF MERCHANT BANKER:
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.
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.
Review By Dilip Davda on September 27, 2018
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 AKI India Limited offers an early investment opportunity in AKI India Limited. A stock market investor can buy AKI India IPO shares by applying in IPO before AKI India Limited shares get listed at the stock exchanges. An investor could invest in AKI India IPO for short term listing gain or a long term.
Read the AKI India IPO recommendations by the leading analyst and leading stock brokers.
AKI India IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the AKI India IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for AKI India IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the AKI India IPO.
The AKI India IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit AKI India IPO allotment status to check.
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