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Bombay Super Hybrid NSE SME IPO review (May apply)

Review By Dilip Davda on Apr 6, 2018

Bombay Super Hybrid Seeds Ltd. (BSHS) is engaged in dealing of premium quality agricultural seeds covering 27 crops and 111 varieties and catering to Gujarat, Maharashtra, Rajasthan, Madhya Pradesh, Andhra Pradesh and Karnataka. It has a net work of 350 dealers and also has seed processing unit and seed testing laboratory.  

To part finance its repayment of loan, working capital and general corpus fund needs, BSHS is coming out with a maiden IPO of 1732000 equity shares of Rs. 10 each at a fixed price of Rs. 60 per share to mobilize Rs. 10.39 crore. Issue opens for subscription on 12.04.18 and will close on 17.04.18. 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 is solely lead managed by Monarch Networth Capital Ltd. and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.41% of post issue paid up capital of the company. After raising initial equity at par, it raised further equity at a price of Rs. 17 per share. Average cost of acquisition of shares by the promoters is Rs. 12.72 and Rs. 12.97 per share. Post issue, its current paid up capital of Rs. 4.83 crore will stand enhanced to Rs. 6.56 crore.

On performance front, BSHS has posted turnover/net profits of Rs. 30.13 cr. / Rs. 0.25 cr. (FY14), Rs. 31.33 cr. / Rs. 0.04 cr., (FY15), Rs. 63.13 cr. / Rs. 0.27 cr. (FY16) and Rs. 109.70 cr. / Rs. 0.80 cr. (FY17). For first nine months of the current fiscal, it has earned net profits of Rs. 0.87 cr. on a turnover of Rs. 72.91 cr. Thus for FY14 and FY15 it posted static turnover with wild swing in bottom lines. Thereafter, it has marked steady growth in top and bottom lines. For last three fiscals it has posted an average EPS of Rs. 1.47 and an average RoNW of 11.54%. Issue is priced at a P/BV of 3.77 based on its NAV of Rs. 15.91 as on 31.12.17. If we annualize latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 34 against industry average of 30. As per offer documents, it has shown listed peers as Mangalam Seeds, Kaveri Seeds, Monsanto, R J Bio, Camson Seeds, Omega AG that are trading at a P/E of around 37, 26, 33,NA, 14, 500 respectively as on 06.04.18 closings. Considering industry average, issue is aggressively priced.

On merchant banker’s front, this is the 6th mandate from its stable in last six fiscals. Out of last 5 listings, 1 opened at par and the rest 4 with a premium ranging from  1.4% to 45% on the day of listing. IPO of VCU Data that opened at Rs. 36.25 against offer price of Rs. 25 per share is currently trading around Rs. 14 per share (as on 04.04.18).


Conclusion / Investment Strategy

Although company has shown better top and bottom lines for recent years, considering aggressive pricing, cash surplus investors may consider investment for long term.

Review By Dilip Davda on Apr 6, 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

Bombay Super Hybrid Seeds IPO FAQs

  1. 1. Why Bombay Super Hybrid Seeds IPO?

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

  2. 2. How is Bombay Super Hybrid Seeds IPO?

    Read the Bombay Super Hybrid Seeds IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Bombay Super Hybrid Seeds IPO what should investors do?

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

  4. 4. Is Bombay Super Hybrid Seeds IPO good?

    Our recommendation for Bombay Super Hybrid Seeds IPO is to subscribe for long term.

  5. 5. Is Bombay Super Hybrid Seeds IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Bombay Super Hybrid Seeds IPO.

  6. 6. When will Bombay Super Hybrid Seeds IPO allotment status?

    The Bombay Super Hybrid Seeds IPO allotment status will be available on or around Apr 20, 2018. The allotted shares will be credited in demat account by Apr 24, 2018. Visit Bombay Super Hybrid Seeds IPO allotment status to check.

  7. 7. When will Bombay Super Hybrid Seeds IPO list?

    The Bombay Super Hybrid Seeds IPO will list on Wednesday, April 25, 2018, at NSE SME.