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• ARAL is in the business of providing turnkey automation solutions to automotive and manufacturing industries with related services.
• It has posted inconsistency in its top and bottom lines. In fact, it marked loss with declined top line for H1 of FY24 and that raises concern.
• Based on FY24 financial performance so far, the issue is having a negative P/E.
• There is no harm in skipping this RI which is "High Risk/Low Return" bet.
ABOUT COMPANY:
Affordable Robotic & Automation Led. (ARAL) started the services/ business of providing turnkey automation solution to automotive, semi-automotive and manufacturing industries. The Company programs and automates the functions of machines used in manufacturing process of automobile industry. The Assembly facility of the Company is situated at Pune, Maharashtra along with the Head office, covering an area of 13,646 sq. meters. The assembly unit is equipped with requisite software, technology, machinery, spares store and other basic amenities for its employees making itself an integrated facility.
The Company is also in the business of assembling and installing automatic multilevel car parking system. This system is preferred by residential complexes, shopping malls, commercial buildings and public sector especially in Smart City projects of various Smart Cities Projects in the Country.
Its trained and professional experts are inter alia involved in engineering & design; controls & automation; process study; robotic application; robotic simulation; offline programming; ergonomic study; layout presentation; assembly; material handling design; bulk storage system design; project management; quality and certification; finance & procurement; HR & administration; spares & service support; and training. The company operates on certain core values, that ensures that the Company achieves its end objective without compromising on the quality of the products of the Company.
Company specializes in analyzing the process which is followed in its manufacturing activity and thereby strives to provide quality automation solution to increase the productivity and client's satisfaction. The Company has an in-house team with technical expertise who does the required programming by using advanced software. It operates with a customer centric approach whereby the Company focuses on continuous training of team which helps it to be innovative and provide quality solution to customers. Its customers in automation business are mostly Automobile industries who use ARAL's automation solution in their manufacturing processes.
Apart from providing automation solutions, it also manufactures Special Purpose Machine (SPM) as per the requirement of customers. Foreseeing the growth in car-parking business, the Company by using its automation business expertise has ventured into automated car parking segment which has allowed the Company to gain renowned clients. It is providing various types of highly automated type of parking to customers suitable to their needs. Company is doing lot of research in various other AI like Vision, Conversation AI & Navigation AI. Future products will have lot of these AIs inbuilt. In the year 2018, the Company made its maiden initial public offering of 26,81,600 Equity Shares of face value of Rs. 10/- each at an issue price of Rs. 85/- per Equity Shares aggregating to Rs. 22.79 cr. and consequently the Equity Shares were listed on SME Platform of BSE Limited ("BSE SME"). As of September 30, 2023, it had 331 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 1066666 equity shares of Rs. 10 each at a fixed price of Rs. 450 per share to mobilize Rs.48.00 cr. The issue opens for subscription on February 26, 2024, and will close on March 07, 2024. The company is offering RI in the ratio of 46 for 439 shares to its eligible stakeholders as of the record date of February 12, 2024. Full amount is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 1.50 cr. for this RI process, and from the net proceeds it will utilize Rs. 38.00 cr. for investment it its material subsidiary i.e. ARAPL RaaS Pvt. Ltd., Rs. 8.50 cr. for incremental working capital.
The issue is jointly lead managed by Saffron Capital Advisors Pvt. Ltd. and Phillip Capital (India) Pvt. Ltd., while Cameo Corporate Services Ltd. is the registrar of the issue.
Post-RI, company's current paid-up equity capital of Rs. 10.18 cr. will stand enhanced to Rs. 11.25 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 506.08 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit/ -(loss) of Rs. 56.28 cr. / Rs. - (3.53) cr. (FY21), Rs. 81.23 cr. / Rs. 2.37 cr. (FY22), and Rs. 114.00 cr. / Rs. 2.16 cr. (FY23). For H1 of FY24, it marked a loss of Rs. - ( 6.79) cr. on a total income of Rs. 42.89 cr. Thus it marked inconsistency in its performance so far and high loss for the first half of ongoing fiscal.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 541402 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 533.40 on February 09, 2024, and opened on an ex-right basis at Rs. 518.00 on February 12, 2024. Since then, it has marked a high/low of Rs. 523.85 / Rs. 492.25. The scrip last closed at Rs. 508.40 as of February 23, 2024. For the last 52 weeks' it has posted a high/low of Rs. 851.04 / Rs. 290.58.
The promoters' holding has been constant at 61.48% for the last three quarters ended with Sept. 30, 2023. The counter is well managed above the RI price to lure investors.
Review By Dilip Davda on February 25, 2024
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 Affordable Robotic & Automation Rights Issue 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Affordable Robotic & Automation Rights Issue 2024 worth investing. The Affordable Robotic & Automation Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Affordable Robotic & Automation Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Affordable Robotic & Automation Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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