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Review By Dilip Davda on December 16, 2023
• SML is in the logistics business specializing in sea freight forwarding.
• It is operating in a highly competitive segment.
• It posted fluctuating profit margins for the reported periods.
• Based on annualized FY24 earnings, the issue is exorbitantly priced.
• There is no harm in skipping this costly bet.
ABOUT COMPANY:
Sahara Maritime Ltd. (SML) is registered with Director General of Shipping, Ministry of Shipping, Government of India to act as Multimodal Transport Operator, and is an ISO 9001:2015 certified Freight Forwarder. The Company specializes in sea freight forwarding. It caters services mainly in the domestic market specifically in the state of Maharashtra.
The company offers customers a comprehensive range of freight-related services, along with ancillary transport management. Additionally, it has established informal partnerships with various intermediaries to provide ancillary services such as Transportation, Multimodal Transportation, Project cargo handling, Third Party Logistics, Packaging, loading/unloading, and unpacking of items. These additional services enable it to provide end-to-end solutions and other value-added services that cater to customers' diverse needs.
The company sources additional services from third party. This asset-light business model grants it the flexibility to develop tailored logistic solutions across diverse industries while ensuring scalability of services. As of September 30, 2023, it had 52 employees on its payroll.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden IPO of 849600 equity shares of Rs. 10 each at a fixed price of Rs. 81 per share to mobilize Rs. 6.88 cr. The issue opens for subscription on December 18, 2023, and will close on December 20, 2023. The minimum application to be made is for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 27.67% of the post-IPO paid-up capital of the company. SML is spending Rs. 0.92 cr. for this IPO and from the net proceeds, it will spend Rs. 0.33 cr. for capital expenditure, Rs. 4.83 cr. for working capital and, Rs. 0.80 cr. for general corporate purposes. Higher spending for IPO process indicates fully structured model of fund raising.
The issue is solely lead managed by Swaraj shares and Securities Pvt. Ltd. while Bigshare Services Pvt. Ltd. is the registrar of the issue. Shreni Shares Ltd. is the market maker for the company. The IPO is underwritten by Shreni Shares for 85% and Swaraj Shares for 15%.
After issuing initial equity shares at par value, the company issued further equity shares at a price of Rs. 4200 in February 2023, and also issued bonus shares in the ratio of 200 for 1 in the same month. The average cost of acquisition of shares by the promoters is Rs. 0.05 per share.
Post-IPO, company's current paid-up equity capital of Rs. 2.22 cr. will stand enhanced to Rs. 3.07 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 24.87 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income.net profit of Rs. 10.22 cr. / Rs. 0.65 cr. (FY21), Rs. 21.05 cr. / Rs. 0.52 cr. (FY22), and Rs. 26.11 cr. / Rs. 1.21 cr. (FY23). For H1 of fY24 ended on September 30, 2023, it earned a net profit of Rs. 0.01 cr. on a turnover of Rs. 5.32 cr.
For the last three fiscals, the company has reported an average EPS of Rs. 4.12, and an average RoNW of 19.60%. The issue is priced at a P/BV of 3.38 based on its NAV of Rs. 23.93 as of September 30, 2023, and at a P/BV of 2.21 based on its post-IPO NAV of Rs. 36.73 per share.
If we annualize FY24 earnings and attribute it to post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 1157. Thus the issue is priced exorbitantly and the tiny equity post-IPO indicates longer gestation period.
For the reported periods, the company has reported PAT margins of 6.36% (FY21), 2.49% (FY22), 4.63% (FY23), 0.20% (H1-FY24). Thus it posted fluctuating margins till FY23 and drastic fall for H1-FY24.
DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Cargotrans Maritime, AVG Logistics, Cargosol Logi., and Amiable Logi. As their listed peers. They are trading at a P/E of 15.57, 12.44, 11.95, and 12.88 (as of December 15, 2023). However, they are comparable on an apple-to-apple basis.
MERCHANT BANKER'S TRACK RECORD:
This is the 5th mandate from Swaraj Shares in the current fiscal. Out of the last four listings, 1 IPO opened at discount and the rest with premiums ranging from 15.38% to 85.83% on the listing date.
Review By Dilip Davda on December 16, 2023
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. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. 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 their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
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.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Sahara Maritime Limited offers an early investment opportunity in Sahara Maritime Limited. A stock market investor can buy Sahara Maritime IPO shares by applying in IPO before Sahara Maritime Limited shares get listed at the stock exchanges. An investor could invest in Sahara Maritime IPO for short term listing gain or a long term.
Read the Sahara Maritime IPO recommendations by the leading analyst and leading stock brokers.
Sahara Maritime IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Sahara Maritime IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Sahara Maritime IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Sahara Maritime IPO.
The Sahara Maritime IPO allotment status will be available on or around December 21, 2023. The allotted shares will be credited in demat account by December 22, 2023. Visit Sahara Maritime IPO allotment status to check.
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