Review By Dilip Davda on Nov 15, 2018
• ICLMIL is engaged in third party product trading and marketing.
• Based on performance parameters, issue is fully priced.
• Listed peers comparison is misleading.
• LM has poor track record.
ICL Multitrading India Ltd. (ICLMIL) that was incorporated as ICL Infradevelopers Pvt. Ltd. rechristened as ICL Multitrading India Ltd. and is currently a multi-product branding and distribution Company. The company sells products under the Brand "ICL". It focuses on distribution through network of warehouses, super stockiest and distributors with the presence primarily in Uttar Pradesh, Uttarakhand and Jharkhand. Major category of products includes consumer products such as spices, tea, suiting-shirting & related accessories, incense sticks (Dhoop), gifting products and other products.
Further, it has also entered into herbal products segment and is procuring herbal wellness and cosmetic products from various manufacturers which are being sold through the online platform www.adiherbal.com. ICLMIL gets its products manufactured from third party manufacturers and are packed directly under its brand name by these manufacturers. However, for Tea, it has established own sorting and packaging facility and sells two varieties of tea ICL Premium and ICL Gold.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital, branding and advertising expenses and general corpus fund needs, ICLMIL is coming out with a maiden IPO of 2100800 equity shares of Rs. 10 each at a fixed price of Rs. 85 per share to mobilize Rs. 17.86 cr. Issue opens for subscription on 19.11.18and will close on 22.11.18. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Corporate Capitalventures Pvt. Ltd. while Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 30.16% of post issue paid up capital of the company.
Having raised initial equity at par, it converted as well as issued right shares too at par. It has also issued bonus shares in the ratio of 44 for 10 (August 2017) and 4 for 10 (March 2018). Average cost of acquisition of shares by the promoters is Rs. 0.16, Rs. 1.32, Rs. 6.72 and Rs. 7.14 per share. Post issue its current paid up equity capital of Rs. 4.86 cr. will stand enhanced to Rs. 6.96 cr.
On financial performance front, for last three fiscals, ICLMIL has on a consolidated basis posted turnover/net profits of Rs. 26.48 cr./ Rs. 0.40 cr. (FY16), Rs. 50.58 cr. / Rs. 1.82 cr. (FY17) and Rs. 57.32 cr. / Rs. 3.20 cr. (FY18). For first two months ended on 31.05.18 it has earned net profit of Rs. 0.60 cr. on a turnover of Rs. 9.22 cr. For last three fiscals on a consolidated basis it has posted an average EPS of Rs. 6.06 and an average RoNW of 51.12%. Issue is priced at a P/BV of 4.96 on the basis of NAV of Rs. 17.14 as on 31.05.18 and at a P/BV of 2.32 on the basis of post issue NAV of Rs. 36.69. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 16 against industry average of 34.
COMPARE WITH LISTED PEERS:
As per offer documents it has shown Godrej Agrovet, Future Consumer, Hindustan Foods, Jhandewalas Foods, Naturite Agro and Kwality Ltd. as its listed peers that are currently trading at a P/E of 46, 207, 57, 13,NA and 4 (as on 15.11.18 closing). However, all these companies are not strictly comparable with ICLMIL and are misleading.
MERCHANT BANKER’S TRACK RECORD:
On merchant banker’s front, this is the 8th mandate from its stable in last three fiscals. Out of last 7 listings 1 opened at discount and the rest with a premium ranging from 0.07% to 34.61% on the day of listing. Currently five out of them are trading at a discount to offer price.
At a P/E of around 16 the issue appears fully priced. Its listed peers are not strictly comparable. On P/BV aspect, issue appears pricy. Hence cash surplus risk savvy investors may consider investment at their own risk.
Review By Dilip Davda on Nov 15, 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. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.
(SEBI registered Research Analyst-Mumbai).
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.
The ICL Multitrading IPO Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered IPO Analysts tells you if ICL Multitrading IPO worth investing. The ICL Multitrading IPO Note sets the IPO expectations in systematic way which tells you if ICL Multitrading IPO good to buy (good or bad / yes or no). The IPO Forecast tells you weather to invest in ICL Multitrading IPO by providing IPO recommendations i.e. subscribe, avoid and neutral.
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