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Review By Dilip Davda on July 3, 2018
Ambani Organics Ltd. (AOL) is a manufacturer, processor, importer, supplier and exporter of water based speciality chemicals used in Paper Industry, Paint Industry, Textile Industry, Carpet Industry, Adhesive Industry, etc. It is an “ISO 9001:2015 – Quality Management System” certified company and has also obtained GOTS (Global Organic Textiles Standards) certification for some of its textile industries chemicals. Company offers a range of over 100 speciality chemicals under the “AOPL” brand, which are used in various industries like Paper industry, Textile Industry, Adhesive Industry, Paint and Construction Industry and Carpet Industry. Its products include binders, PVP Emulsions, Acrylic Emulsions, Textile Auxiliaries, Detergent formulation, Acrylic Polymers, Adhesives, Styrene Acrylic, Defoamer, Dispensers, Butyl Acrylate based Terypolymer, Thickeners, Paint Driers etc.
To part finance its working capital and general corpus fund needs, AOL is coming out with a maiden IPO of 1368000 equity shares of Rs. 10 each at a fixed price of Rs. 66 per share to mobilize Rs. 9.03 crore. Issue comprises of offer for sale of 100000 shares and fresh equity issue of 1268000 shares. Issue opens for subscription on 06.07.18 and will close on 10.07.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 26.94% of the post issue paid up capital of the company. Issue is solely lead managed by Aryaman Financial Services Ltd. and Universal Capital Securities Pvt. Ltd. is the registrar to the issue. Except for 310559 shares issued at Rs. 19.32 per share in March 2015, it raised all other equity at par between March 2004 and March 2016. Average cost of acquisition of shares by the promoters is Rs. 10.51 and Rs. 10.72 per share. Post issue, AOL’s current paid up equity capital of Rs. 3.81 crore will stand enhanced to Rs. 5.08 crore.
On performance front, AOL has (on a consolidated basis) posted turnover/net profits of Rs. 52.90 cr. / Rs. 0.80 cr. (FY17) and Rs. 65.58 cr. / Rs. 1.91 cr. (FY18). On standalone basis it incurred loss of Rs. -2.44 cr. on a turnover of Rs. 37.66 cr. (FY15) and loss of Rs. - 0.39 cr. on a turnover of Rs. 32.91 cr. (FY16). For last two fiscals it has posted an average EPS of Rs.4.05 and 28.12% (on a consolidated basis) and for last three fiscals (on a standalone basis) it has posted an average EPS of Rs. 2.95 and an average RoNW of 20.03%. Issue is priced at a P/BV of 4.27 bases on its NAV of Rs. 15.45 as on 31.03.18 and at a P/BV of 2.35 on the basis of post issue NAV of Rs. 28.07 (on a consolidated basis). If we consider FY18 net and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 18. As per offer document it is showing Nikhil Adhesive as its listed peer that is currently trading at a P/E of around 21 (as on 03.07.18). Thus issue appears fully priced. Its current debt ratio of 2.73.
On merchant banker’s front, this is 35th mandate from its stable in last four fiscals. Out of last 10 listings 3 opened at a discount to offer price, 3 at par and 4 with a premium ranging from 1% to 6% on the day of listing. Thus it has poor track record.
Considering fully priced issue, risk savvy cash surplus investors may consider investment for long term at their own risk.
Review By Dilip Davda on July 3, 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 Ambani Organics Limited offers an early investment opportunity in Ambani Organics Limited. A stock market investor can buy Ambani Organics IPO shares by applying in IPO before Ambani Organics Limited shares get listed at the stock exchanges. An investor could invest in Ambani Organics IPO for short term listing gain or a long term.
Read the Ambani Organics IPO recommendations by the leading analyst and leading stock brokers.
Ambani Organics IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Ambani Organics IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Ambani Organics 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 Ambani Organics IPO.
The Ambani Organics IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Ambani Organics IPO allotment status to check.
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