Anmol India BSE SME IPO review (May apply)

Review By Dilip Davda on Feb 6, 2019

•    Anmol India is in the business of coal trading. It imports coal and supplied to medium and small industries.
•    Coal is high volatile commodity and impacted by Government policies.
•    It derives benefits from its long standing contacts with coal suppliers and user industry.
•    Based on financial parameters, issue appears fully priced.

ABOUT COMPANY:
Anmol India Ltd. (AIL) is dealing in coal import and supply business. With its quality supply and better service, it has become the most preferred trusted brand among its suppliers/customers. The company that was initially servicing only brick kiln industry and coal traders today caters to the demand of varied industries with a supply of coal and pet coke. The prime product of AIL is USA Coal. It also supplied Indonesian Coal, petroleum coke. Small and medium scale manufacturers are the prime customers of AIL. The company is dealing in a high volatile commodity and also impacted by Government policies.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, AIL is coming out with a maiden IPO of 3100000 equity shares of Rs. 10 each at a fixed price of Rs. 33 per share. The company mulls mobilizing Rs. 10.23 crore through this issue. It opens on 12.02.19 and will close on 14.02.19. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 29.86% of the post issue paid up capital of the company.

Issue is solely lead managed by Share India Capital Services Pvt. Ltd. while Bigshare Services Pvt. Ltd. is the registrar to the issue. Having issued initial equity at par, it raised further equity at a price of Rs. 50 per share between March 2010 and March 2012. It has also issued bonus shares in the ratio of 2 shares for every 1 share held in July 2018. Average cost of acquisition of shares by the promoters is Rs. 3.33 per share. Post issue, AIL's current paid up equity capital of Rs. 7.28 cr. will stand enhanced to Rs. 10.38 cr.

FINANCIAL PERFORMANCE:
On performance front, for last three fiscals, AIL has posted turnover/net profits of Rs. 189.81 cr. / Rs. 0.83 cr. (FY16), Rs. 186.50 cr. / Rs. 1.09 cr. (FY17) and Rs. 299.24 cr. / Rs. 2.62 cr. (FY18), For first half of FY19it has earned net profit of Rs. 1.72 cr. on a turnover of Rs. 263.06 cr. For last three fiscals, it has posted an average EPS of Rs. 2.49 and an average RoNW of 17.54%. Issue is priced at a P/BV of 2.12 on the basis of its NAV of Rs. 15.56 as on 31.03.18 and at a P/BV of 1.47 on the basis of post issue NAV of Rs.22.42. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 10 against industry average of 12. Thus issue appears fully priced.

AIL was able to abstract PAT margins of 0.65% (H1FY19), 0.88% (FY18), 0.58% (FY17), 0.44% (FY16). The reason for jump in top and bottom line is due to focus on corporate sector, penetration of in-house app "Anmol Coal" and better business environment for FY18. As company gains in size and strength, it will be able to attract corporate customers which demand on-time product delivery and provide demand visibility. This helps the company in bargain better rate from source and is able to service retail clients directly which provides better margin.

COMPARISION WITH LISTED PEERS:
As per offer documents, it has shown Coal India and GMDC as its listed peers. They are currently trading at a P/Es of around 13.7 and 6 (as on 05.02.19). However, they are not strictly comparable as Anmol is engaged in coal trading activities only. .

MERCHANT BANKER'S TRACK RECORD:
On merchant banker's front, this is the first mandate from Share India Capital and it has not past track record.


Conclusion / Investment Strategy

Coal is witnessing erratic supply against rising demand. Future prospects lies on company's ability to sustain growth pattern. Based on current financials, issue appears fully priced. Investors may consider long term investment in this fully priced issue.

Review By Dilip Davda on Feb 6, 2019

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

Anmol India IPO FAQs

  1. 1. Why Anmol India IPO?

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

  2. 2. How is Anmol India IPO?

    Read the Anmol India IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Anmol India IPO what should investors do?

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

  4. 4. Is Anmol India IPO good?

    Our recommendation for Anmol India IPO is to subscribe for long term.

  5. 5. Is Anmol India IPO worth Investing?

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

  6. 6. When will Anmol India IPO allotment status?

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

  7. 7. When will Anmol India IPO list?

    The Anmol India IPO will list on Thursday, February 21, 2019, at BSE SME.

3 Comments

Talwar
3. Talwar  Feb 6, 2019 15:30
Following the prospectus, the PAT margin of the company has averaged around .64% and the ROE has averaged around 18%. Further the sales of the company has also increased substantially with the current FY2019 (Rs 2630.64L) sales almost nearing to the full year sales of FY2018 (Rs 2992.42L). So this indicates that the company has a short operating cycle , thus has been able to generate greater sales with the existing capital. Hence despite of low PAT margin the company has been able to attain such a good ROE. Thus the company seems to be a good investment avenue.
Rohit Pasricha
2. Rohit Pasricha  Feb 6, 2019 14:48
Anmol India is getting listed at P/E multiple of 9.16x based on FY18 earnings whether average industry P/E is 12x. Positive hope for this IPO.
Mayank Goyal
2.1. Mayank Goyal  Feb 6, 2019 15:08
I completely agree.
Mayank Goyal
1. Mayank Goyal  Feb 6, 2019 14:17
As per my study of DRHP of Anmol India Limited, Financial seems great in terms of Return on Equity (ROE = 26.33%) and Earning per share (EPS = 2.36 Rs.) as on 30-09-2018 i.e. 6 months result in the current financial year. Post issue, Book value per share is near round 22.42 Rs, which is very good as Price to book works out to be at 1.47 while coal india trades at 12.19 PE. In My opinion, there is an IPO in the SME segment after a long time which has a good pedigree of promoters and most importantly the lead manager of the issue is "SHARE INDIA CAPITAL SERVICES PRIVATE LIMITED" which is associate company of "share india securities Limited" which is a leading name in Delhi stock market. Must Apply. Also 4 year CAGR of revenue , EBITDA and PAT is very healthy.








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