Angel Fibers BSE SME IPO Review (Subscribe for Long Term)

Review By Dilip Davda on Feb 14, 2018

Angel Fibers Ltd. (AFL) is primarily in the business of spinning of cotton yarn. It is also trading in a by-product i.e. cotton waste.  Company has installed 19,584 spindles which can manufacture 4363 Metric Tonne cotton yarn per annum viz.,30s Ne Combed and 40s Ne Compact variety used to make products like bed sheets, socks, knitted fabrics, etc. and 40s Ne Compact Combed yarn used to make Shirting, Sheeting, Bottom Weights, etc. AFL sells its products in domestic / international markets.

To avail listing benefits, AFL is coming out with a maiden IPO of 6748000 equity shares of Rs. 10 each at a fixed price of Rs. 27 per share to mobilize Rs. 18.22 crore. Issue opens for subscription on 20.02.18 and will close on 23.02.18. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Guiness Corporate Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.99% of the post issue paid up capital of the company. Entire issue is by way of offer for sell and hence no fund is available for the company. Having issued initial equity shares at par, it raised further equity at a price of Rs. 100 per share. Being OFS, its post issue paid up equity capital remains same i.e. at Rs. 25 crore. Average cost of acquisition of shares by the promoters is Rs. 10 per share.

On performance front, AFL has posted turnover/net profits of Rs. 51.02 cr. / Rs. –( 5.65) cr. (FY16), Rs. 88.74 cr. / Rs. 3.11 cr. (FY17). For the first half of the current fiscal, it has earned net profit of Rs. 2.59 cr. on a turnover of Rs. 46.08 cr. For last three fiscals it has posted an average EPS of Rs. – (0.14) and an average RoNW of –(2.81)%. Thus it has negative earnings and as such, its P/E working will transpire in negative. Asking price is at a P/BV of about 2.7. If we annualize latest earnings and attribute it on post issue equity then issue is priced at a P/E of around 13 plus.  As per offer documents, its listed peers are trading at a P/E of 15 (Ginni Filament) and 45 (Nagreeka Exports). Thus pricing appears reasonable. However, sudden jump in top and bottom lines are bit surprising.

On merchant banker’s front, this is the 25th mandate from its stable in last three years. Out of last 10 listings, 2 opened at discount, 2 at par and the rest with a premium of 5% to 20% on the day of listings.


Conclusion / Investment Strategy

Considering its performance issue appears reasonably priced. However, it has just achived par value and has arrested negative trends with current working.  Hence one may consider moderate investment for long term.

Reviewer recommends Subscribing to the issue for Long Term.

Review By Dilip Davda on Feb 14, 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 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

Angel Fibers IPO FAQs

  1. 1. Why Angel Fibers IPO?

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

  2. 2. How is Angel Fibers IPO?

    Read the Angel Fibers IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Angel Fibers IPO what should investors do?

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

  4. 4. Is Angel Fibers IPO good?

    Our recommendation for Angel Fibers IPO is to subscribe for long term.

  5. 5. Is Angel Fibers IPO worth Investing?

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

  6. 6. When will Angel Fibers IPO allotment status?

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

  7. 7. When will Angel Fibers IPO list?

    The Angel Fibers IPO will list on Tuesday, March 6, 2018, at BSE SME.

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