Indo US Bio-Tech BSE SME IPO review (Apply at your own risk)

Review By Dilip Davda on Apr 19, 2018

Indo US Bio-Tech Ltd. (IUBL) that started its journey way back in 2004 as a seed testing unit and trading in seeds in Nagpur, Hyderabad and Gujarat started in-house R&D as backward integration and currently producing variety of seeds like oil seeds, pulses seeds, vegetable seeds, spices seeds and cereals seeds. At present our company is having collection of around 4460 varieties of germplasm in various crops. Its products are being marketed under various brands names like INDO-US 955, INDO-US 936, INDO-US 927 etc. It is 9001:2015 certified engaged in research plant, breeding products, processing and marketing of sales high performing open pollinated and hybrid agricultural seed varieties. IUBL is a recognized seed importer from National Seeds Corporation Limited.

To part finance its working capital and general corpus fund needs,  IUBL is coming out with a maiden IPO of 1430000 equity shares of Rs. 10 each at a fixed price of Rs. 51 per share to mobilize Rs. 7.29 crore. Issue opens for subscription on 30.04.18 and will close on 03.05.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 29.46% of post issue paid up capital of the company. Issue is solely lead managed by Swastika Investmart Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Since incorporation till March 2015 it raised equity at par and has issued bonus shares in the ratio of 1.3 for 1 share held in December 2017. Average cost of acquisition of shares by the promoters is Rs. 4.48 per share. Post issue, its current paid up equity capital of Rs. 3.42 cr. will stand enhanced to Rs. 4.85 cr.

On performance front, IUBL has posted turnover/net profits of Rs. 14.86 cr. / Rs.0.26 cr. (FY14), Rs. 19.66 cr. / Rs. 0.50 cr. (FY15), Rs. 19.15 cr. / Rs. 0.36 cr. (FY16) and Rs. 24.58 cr. / Rs. 0.65 cr. (FY17). It suffered a setback in bottom line for FY16. For first seven months of the FY18 it has earned net profit of Rs. 0.74 cr. on a turnover of Rs. 15.89 cr. Thus FY17and FY18 data appears to have been window dressed for IPO process. For last three fiscals it has posted an average EPS of Rs. 1.57 and an average RoNW of 14.89%. Issue is priced at a P/BV of 3.77 based on its NAV of Rs. 13.53 as on 31.10.17 and at a P/BV of 2.08 on the basis of post issue NAV of Rs. 24.56. If we annualize latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of 19 plus. As per offer documents, it is considering Mangalam Seeds, Kaveri Seeds and Nath Bio as its listed peers that are trading at a P/Es of 36, 27 and 39 respectively (as on 19.04.18). In fact based on FY17 earnings it is priced at a P/E of 38 and first seven months super profits raises doubt about its sustainability. Based on FY 17 earnings it is highly priced, but based on FY18 annualized earnings it is priced at a P/E of 19 thus looks reasonable. However, Last result raises eyebrows with super margins which are very unlikely to sustain considering its past track records.

On merchant banker’s front, this is the 14th mandate from its stable in last three fiscals. Out of last 10 listings, 2 opened at discount to offer price and the rest with a premium ranging from 2.8% to 20% on the day of listing.


Conclusion / Investment Strategy

Super profits for FY17 and seven months of FY 18 appears to have been window dressed before IPO and are a major concern for its sustainability. Considering this, cash surplus risk savvy investors may consider investment at their own risk for long term.

Review By Dilip Davda on Apr 19, 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

Indo US BioTech IPO FAQs

  1. 1. Why Indo US BioTech IPO?

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

  2. 2. How is Indo US BioTech IPO?

    Read the Indo US BioTech IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Indo US BioTech IPO what should investors do?

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

  4. 4. Is Indo US BioTech IPO good?

    Sorry, we didn't rate the Indo US BioTech IPO.

  5. 5. Is Indo US BioTech IPO worth Investing?

    Our lead analyst Mr. Dilip Davda didn't rate the Indo US BioTech IPO.

  6. 6. When will Indo US BioTech IPO allotment status?

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

  7. 7. When will Indo US BioTech IPO list?

    The Indo US BioTech IPO will list on Friday, May 11, 2018, at BSE SME.








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