Artedz Fabs NSE SME IPO review (May apply)

Review By Dilip Davda on Mar 15, 2019

• AFL has created a niche place in made to order cotton fabrics.
• It operates on the just-in-time concept to manage inventory levels with maximum cost benefits.
• The issue is priced reasonably at a P/E of around 6.
• Lead Manager has an average track record.

ABOUT COMPANY:
Artedz Fabs Ltd. (AFL) is engaged in manufacturing and trading of textile fabrics for shirting and suiting. It specializes in the manufacturing of textile fabrics majorly from cotton yarn, linen yarn as well as blended yarn as raw material. AFL is primarily engaged in the manufacturing of grey fabrics with high-end and fashion-forward designs using its in-house expertise designing team. The company caters to both domestic and international markets. Its current installed capacity is of 21 lakhs sq. mtrs. Per annum with 43 installed looms. It specializes in tailor-made fabrics as demanded by the markets with changing fashion. If follows just-in-time concept for managing its inventory levels that helps it in curtailing costs and thus operating on made to order business model.

Artedz
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, AFL is coming out with a maiden IPO of 2310000 equity shares of Rs. 10 each via book building process with a price band of Rs. 34 – Rs. 36 per share to mobilize Rs. 7.85 cr. – Rs. 8.32 cr. (based on lower and upper price bands). Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. The issue opens for subscription on 18.03.19 and will close on 20.03.19. Post allotment, shares will be listed on NSE SME Emerge.

The Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. while Bigshare Services Pvt. Ltd. is the registrar to the issue. Pantomath Stock Brokers Pvt. Ltd. is acting as the market maker for this issue.

The Issue constitutes 26.99% of the post issue paid up capital of the company. AFL has issued entire equity at par and has also issued bonus shares in the ratio of 1 share for every 6 shares held in September 2010. The average cost of acquisition of shares by the promoters is Rs. 8.92 and Rs. 15.82 per share. Post issue AFL's current paid up equity capital of Rs. 6.25 cr. will stand enhanced to Rs. 8.56 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, AFL has posted a turnover/net profit (loss) of Rs. 38.78 cr. / Rs. – (0.36x) cr. (FY16), Rs. 53.11 cr. / Rs. 1.79 cr. (FY17) and Rs. 64.34 cr. / Rs. 3.52 cr. (FY18). For H1 of FY19, it has earned a net profit of Rs. 2.54 cr. on a turnover of Rs. 36.63 cr. For the last three fiscals, it has posted an average EPs of Rs. 3.67 and an average RoNW of 31.68%. The issue is priced at a P/BV of 2.07 (based on upper price band) considering NAV of Rs. 17.35 as on 30.09.18.

If we annualize latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 6, thus it is reasonably priced.

COMPARE WITH LISTED PEERS:
As per offer documents, it has considered VTM and Donear as its listed peers that are currently trading at a P/Es of around 11 and 16 (as on 15.03.19) However, they are not strictly comparable.


MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's front, this is the 78th mandate from its stable. Out of last 10 listings; all opened at premiums ranging from 0.5% to 8% on the day of listings.


Conclusion / Investment Strategy

Although the textile sector is currently having low fancy and recent few high P/E issues have burnt pockets of investors, this reasonably priced issue may be considered for long term investment.

Review By Dilip Davda on Mar 15, 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

Artedz Fabs IPO FAQs

  1. 1. Why Artedz Fabs IPO?

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

  2. 2. How is Artedz Fabs IPO?

    Read the Artedz Fabs IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Artedz Fabs IPO what should investors do?

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

  4. 4. Is Artedz Fabs IPO good?

    Our recommendation for Artedz Fabs IPO is to subscribe for long term.

  5. 5. Is Artedz Fabs IPO worth Investing?

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

  6. 6. When will Artedz Fabs IPO allotment status?

    The Artedz Fabs IPO allotment status will be available on or around Mar 26, 2019. The allotted shares will be credited in demat account by Mar 28, 2019. Visit Artedz Fabs IPO allotment status to check.

  7. 7. When will Artedz Fabs IPO list?

    The Artedz Fabs IPO will list on Friday, March 29, 2019, at NSE SME.








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