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Ashoka Metcast BSE SME IPO review (May apply)

Review By Dilip Davda on Jan 18, 2018

Ashoka Metcast Ltd. (AML) is a Gujarat based Group Company. Group has business interests in various sectors including Oil and Gas, Steel, Infrastructure, Electronic Equipments and Real Estate. Group’s flagship company – Gujarat Natural Resources Limited. is engaged in the business of Oil & Gas exploration and production and currently has participating interests in 6 producing blocks in Cambay basin and is operator in four of these blocks. The company is listed on BSE and has a market capitalization of around 125 crores. AML is currently engaged in trading of structural steel products such as Round Bars, Flat Bars etc. and through its wholly owned Subsidiary, SGRM the company is proposing to manufacture structural steel products like TMT bars, angles, channels, MS Bars etc. Company plans to leverage its group and promoter networks in the real estate and infrastructure space as well as strong balance sheet situation to increase its presence in the structural steel market of Gujarat and Western India. It has commenced its trading operations in September, 2017. AML has acquired 100% stake in its subsidiary Shree Ghantakarna Rolling Mills Pvt. Ltd. (SGRM) that owns rolling mills with a installed capacity of 12000 mtpa.

To part finance its investment plans in SGRM, repayment of loans and general corpus fund needs, AML is coming out with a maiden IPO of 6000000 equity shares of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 12.00 crore. Issue opens for subscription on 23.01.18 and will close on 25.01.18. 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 Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 56.02% of the post issue paid up capital of the company. Cost of acquisition of shares by the promoters is Rs. 19.98 and Rs. 20. After raising initial equity at par, it raised further equity at a price of Rs. 20 per share. Post issue, its current paid up equity capital of Rs. 4.71 crore will stand enhanced to Rs. 10.71 crore.

As AML has started its operations from second quarter of current fiscal, it has (on a consolidated basis) reported net profit of Rs. 0.05 crore on a turnover of Rs. 6.52 crore for the period ended on 15.11.2017.On standalone basis for past three fiscals it has reported revenue/net profits of Rs. 0.01 cr. / Rs. 0.01 cr. (FY15), Rs. 0.004 cr. / Rs. 0.001 cr. (FY16) and Rs. 0.10 cr. / Rs. 0.01 cr. (FY17). Revenue for all these years was from other income. For last three fiscals, it has posted an average EPS of Rs. 6.90 and average RoNW of 478.79% on an equity base of mere Rs. 0.01 crore. In fact on consolidated basis, it has posted an EPS of Rs. 1.08 and RoNW of 0.86% (both annualized) for the period ended 15.11.17 on an equity base of Rs. 4.71 crore. If we annualize the latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 26 plus and thus issue is fully priced. As per offer documents its peers are trading at a P/Es ranging from 17 to 50. (In this compare table, AML’s figures are based on an equity base of mere Rs. 0.01 crore).

On merchant banker’s front, this is the 24th mandate from its stable in last three fiscals. Out of last 10 listings 2 opened at a discount, 3 around par and the rest with a premium ranging from 1 to 20% on the day of listing. (With listing of Silly Monk as on 18.01.18)

Conclusion: Considering fully priced issue, cash surplus risk savvy investors may consider investment for long term. (Other- apply at your own risk).

 


Conclusion / Investment Strategy

Considering fully priced issue, cash surplus risk savvy investors may consider investment for long term. (Other- apply at your own risk).  

Review By Dilip Davda on Jan 18, 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

Ashoka Metcast IPO FAQs

  1. 1. Why Ashoka Metcast IPO?

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

  2. 2. How is Ashoka Metcast IPO?

    Read the Ashoka Metcast IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Ashoka Metcast IPO what should investors do?

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

  4. 4. Is Ashoka Metcast IPO good?

    Our recommendation for Ashoka Metcast IPO is to subscribe for long term.

  5. 5. Is Ashoka Metcast IPO worth Investing?

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

  6. 6. When will Ashoka Metcast IPO allotment status?

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

  7. 7. When will Ashoka Metcast IPO list?

    The Ashoka Metcast IPO will list on Monday, February 5, 2018, at BSE SME.