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Banka Bioloo NSE SME IPO Review (Avoid)

Review By Dilip Davda on Jan 31, 2018

Banka Bioloo Ltd. (BBL) is focusing on giving sanitation solutions to those who do not have access to toilets as well as to those who have toilets but face trouble treating and managing waste. BBL aims to provide sanitation infrastructure and hygienic solutions for human waste treatment and disposal. Currently it provides sanitation services to Indian Railways and corporate entities. Its bio-digester technology is patented by DRDO (Defense Research and Development Organization). It has installed over 6000 bio-toilet units across India and currently undertake 12 O & M service contracts with Indian Railways.

To part finance its capital expenditure at its Aler and Ibrahimpatnam units, working capital and general corpus fund needs, BBL is coming out with a maiden IPO of 1098000 equity shares of Rs. 10 each at a fixed price of Rs. 115 per share to mobilize Rs. 12.63 cr. Issue opens for subscription on 05.02.18 and will close on 07.02.18. Minimum application is to be made for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Aryaman Financial Services Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.7% of the post issue paid up capital of the company. Average cost of acquisition of shares by the promoters is Rs. 1.63 per share. After initial equity raising at par, it raised further equity in the price range of Rs. 500 to Rs. 1079 per share between March 2013 and March 2015. It has also issued bonus shares in the ratio of 23 for 1 in October 2017. Post issue its current paid up equity capital of Rs. 3.01 cr. will stand enhanced to Rs. 4.11 cr.

On performance front, BBL has posted turnover/net profits of Rs. 5.30 cr. / Rs. 0.09 cr. (FY14), Rs. 8.20 cr. / Rs. 0.08 cr. (FY15), Rs. 14.33 cr. / Rs. 0.32 cr. (FY16) and Rs. 15.16 cr. / Rs. 1.16 cr. (FY17). For first half of current fiscal, it has reported net profit of Rs. 0.32 cr. on a turnover of Rs. 5.67 cr. It appears that for FY17 inventory adjustment has resulted in improved profits. For last three fiscals, it has posted an average EPS of Rs. 2.32 and an average RoNW of 18.82% on an equity base of Rs. 0.13 crore that will enhance many fold now. Issue is priced at a P/BV of 0.34 on the basis of its NAV of Rs. 342.30 as on 30.09.17 and at a P/BV of 2.79 on the basis of its post issue NAV of Rs. 41.16. If we annualize latest earnings and attribute it to fully diluted post issue equity, then asking price is at a P/E of around 74 making it exorbitantly priced offer. It has no listed peers to compare with.

On merchant banker’s front, this is the 26th mandate from its stable in last three fiscals. Out of last 10 listings, 2 opened at discount, 3 around par and the rest with a premium ranging from 1% to 73%. 73% premium was from Apollo Micro the only main board IPO from Aryaman in last thee fiscals.


Conclusion / Investment Strategy

Although company is in a lucrative business as it is promoting “Swachcha Bharat”, its exorbitant pricing makes it an expensive offer. There is no harm in giving it a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jan 31, 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

Banka Bioloo IPO FAQs

  1. 1. Why Banka Bioloo IPO?

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

  2. 2. How is Banka Bioloo IPO?

    Read the Banka Bioloo IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Banka Bioloo IPO what should investors do?

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

  4. 4. Is Banka Bioloo IPO good?

    Our recommendation for Banka Bioloo IPO is to avoid.

  5. 5. Is Banka Bioloo IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Banka Bioloo IPO.

  6. 6. When will Banka Bioloo IPO allotment status?

    The Banka Bioloo IPO allotment status will be available on or around Feb 12, 2018. The allotted shares will be credited in demat account by Feb 15, 2018. Visit Banka Bioloo IPO allotment status to check.

  7. 7. When will Banka Bioloo IPO list?

    The Banka Bioloo IPO will list on Tuesday, February 27, 2018, at NSE SME.

1 Comments

1. Dilip Davda  Feb 3, 2018 10:50:36 AM
According to management, they have better performance in second half every year. Based on this assumptions, even if we take FY17 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 41 thus making it a costly offer. Despite issuing shares in the price range of Rs. 500 to Rs. 1079 per share, promoters average cost of acquisition of share is Rs. 1.63 per share and they want public to subscribe at Rs. 115 per share. Due to these aspects, I maintain my conclusion as "Avoid".