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ShreeOswal Seeds NSE SME IPO review (Apply)

Review By Dilip Davda on May 31, 2018

ShreeOswal Seeds & Chemicals Ltd. (SSCL) is engaged in the business of production, processing and sale of different kind of agricultural seeds, maize and soyabean. Having started business as partnership firm got converted into public limited company in the year 2017. SSCL processes various kinds of seeds at its processing unit which is located at Neemuch, Madhya Pradesh. At present, Company processes 5 varieties of wheat seed, 5 varieties of soya bean seed, 3 varieties of Mustard seed, 1 variety of black grams, 1 variety of corn seeds and 1 Variety of isabgol/psyllium. Majority of its revenue is from the sale of wheat and soyabean seeds. SSCL markets its products under the brand name 'Oswal'. SSCL's has covered state of Bihar, Jharkhand, Maharashtra, Madhya Pradesh, Rajasthan and Uttar Pradesh for marketing of its products with a dealer network of over 6000

To part finance purchase of new plant and machinery, working capital and general corpus fund needs, SSCL is coming out with a maiden IPO of 4576000 equity shares of Rs. 10 each via book building route with a price band of Rs. 25 – Rs. 26 to mobilize Rs. 11.44 cr. to Rs. 11.90 crore (on the basis of lower and upper price bands). Issue opens for subscription on 07.06.18 and will close on 12.06.18. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 30.02% of the post issue paid up capital of the company. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Having issued initial equity at par, it raised further equity at a fix price of Rs. 10.25 per share in February 2018. Average cost of acquisition of shares by the promoters is Rs. 10.11 per share. Post issue, its current paid up equity capital of Rs. 10.67 crore will stand enhanced to Rs. 15.25 crore.

From FY 2012-13 to FY 2017-18, as per Restated Financial Statements, SSCL's total revenue has shown growth from Rs. 22.54 cr. to Rs. 48.61 cr. representing a CAGR of 13.66%, EBITDA has shown growth from Rs. 0.67 cr. to Rs. 4.52 cr., representing a CAGR of 37.40 % and profit after tax has shown growth from Rs. 0.13 cr. to a profit of Rs. 1.02 cr. representing a CAGR of 55.94%. Since it has merged its operations of seeds and psyllium, on a consolidated basis for FY18 it has earned net profit of Rs. 2.29 cr. on a turnover of Rs. 78.19 cr. For last three fiscals on standalone basis it posted an average EPS of Rs. 1.97 and an average RoNW of 14.66%. Based on consolidated working (which reflects only four month's working of psyllium unit) if we attribute it on fully diluted equity post issue, then asking price is at a PE of around 17 against industry composite of 30. Issue is priced at a P/BV of 2.41 based on its consolidated NAV of Rs. 10.78 as on 31.03.18. As per offer documents, it has shown Kaveri Seeds, Mangalam Seeds and Monsanto India as its listed peers that are currently trading at a PE of around 17, 31 and 30 respectively. Even if we consider latest entrants like Bombay Super and Indo US, they are trading at a PE of around 510 and 44 (as on 31.05.18). Thus issue appears reasonably priced.

On merchant banker's front, this is 71st mandate from its stable in last four fiscals. Out of last 10 listings, 1 opened at par and 9 with a premium ranging from 1.59% to 20% on the day of listing.


Conclusion / Investment Strategy

Investors may consider investment for medium to long term in ShreeOswal Seeds NSE SME IPO.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on May 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

ShreeOswal Seeds & Chemicals IPO FAQs

  1. 1. Why ShreeOswal Seeds & Chemicals IPO?

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

  2. 2. How is ShreeOswal Seeds & Chemicals IPO?

    Read the ShreeOswal Seeds & Chemicals IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. ShreeOswal Seeds & Chemicals IPO what should investors do?

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

  4. 4. Is ShreeOswal Seeds & Chemicals IPO good?

    Our recommendation for ShreeOswal Seeds & Chemicals IPO is to subscribe.

  5. 5. Is ShreeOswal Seeds & Chemicals IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the ShreeOswal Seeds & Chemicals IPO.

  6. 6. When will ShreeOswal Seeds & Chemicals IPO allotment status?

    The ShreeOswal Seeds & Chemicals IPO allotment status will be available on or around Jun 15, 2018. The allotted shares will be credited in demat account by Jun 19, 2018. Visit ShreeOswal Seeds & Chemicals IPO allotment status to check.

  7. 7. When will ShreeOswal Seeds & Chemicals IPO list?

    The ShreeOswal Seeds & Chemicals IPO will list on Wednesday, June 20, 2018, at NSE SME.