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Review By Dilip Davda on September 16, 2017
AKM Lace & Embrotex Ltd. (AKM) is engaged in the business of trading of textile products primarily fabrics as well as supply of customized Lace and embroidered work items which we manufacture/process through established job work arrangements. AKM's sale model is divided into two parts, i.e. sale of traded goods, which comprises of cotton fabrics, grey cloth, etc and sale of manufactured/processed goods, which comprises of knitted fabrics primarily lace based. For the year ended March 31, 2017 itsr traded and manufactured goods constituted 73.08% and 26.92% respectively of the total revenue from operations. Company's products are mostly used in the manufacture of apparels such as sarees, shirtings, suitings, and upholstery such as curtains amongst others.
To part finance its working capital and general corpus funds, AKM is coming out with a maiden IPO of 1902000 equity share of Rs. 10 each at a fixed price of Rs. 25 per share to mobilize Rs. 4.76 crore. Issue opens for subscription on 20.09.17 and will close on 22.09.17. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Aryaman Financial Services Ltd. and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Having initial equity at par, company raised further equity in the price range of Rs. 25 to Rs. 500 per share and has also issued bonus shares in the ratio of 10 for 1 in September 2016 out of premium reserves. Post issue its current paid up equity capital of Rs. 1.11 crore will stand enhanced to Rs. 3.01 crore. Issue constitutes 63.14% of fully diluted post issue paid up equity capital of the company.
On performance front, for last four fiscal AKM has reported turnover/net profits of Rs. 0.31 cr. / Rs. 0.001 cr. (FY14), Rs. 0.86 cr. / Rs. 0.003 cr. (FY15), Rs. 1.02 cr. / Rs. 0.006 cr. (FY16) and Rs. 11.31 cr. / Rs. 0.14 cr. (FY17). Sudden jump in top and bottom line is surprising. For last three fiscals, it has posted an average EPS of Rs. 0.70 and average RoNW 2.35%. Issue is priced at a P/BV of 0.90. Thanks to higher NAV due to premium reserves. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 53 thus issue is priced very aggressively.
On merchant banker's front, this is the 17th mandate from its stable in past three years. Out of last 10 listings, 2 IPOs opened at discount, 1 at par, 5 with meager premium and the rest with 8.5 to 20% premium to offer price on the day of listing.
Conclusion: Considering aggressive pricing, there is no harm in giving this issue a miss.
Review By Dilip Davda on September 16, 2017
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 AKM Lace & Embrotex Ltd offers an early investment opportunity in AKM Lace & Embrotex Ltd. A stock market investor can buy AKM Lace IPO shares by applying in IPO before AKM Lace & Embrotex Ltd shares get listed at the stock exchanges. An investor could invest in AKM Lace IPO for short term listing gain or a long term.
Read the AKM Lace IPO recommendations by the leading analyst and leading stock brokers.
AKM Lace IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the AKM Lace IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for AKM Lace IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the AKM Lace IPO.
The AKM Lace IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit AKM Lace IPO allotment status to check.
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