Review By on January 23, 2018
A and M Jumbo Bags Ltd. (AnM) is a Ahmedabad based company and is engaged in the manufacture and sale of various types of FIBC (Jumbo Bags) that are used by fertilizers, cement, sand, food grains, sugar, cattle feeds, spices, agro products, minerals, chemicals, pharma and other consumer product industries for packaging’s. AnM has wide range of Flexible Intermediate Bulk Container (FIBC- Jumbo Bags) in various shapes. The company is also exporting its product in neighboring countries. Most of the products are tailor made as per the requirements of the user industry.
To part finance its working capital and general corpus fund needs, AnM is coming out with a maiden IPO of 616000 equity shares of Rs. 10 each at a fixed price of Rs. 65 per share to mobilize Rs. 4.00 crore. Issue opens for subscription on 29.01.18 and will close on 02.02.18.Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 35.15% of post issue paid up equity 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. Average cost of acquisition of shares by the promoters is Rs. 9.90 and Rs. 10.03 per share. Having issued initial equity at par, it raised further equity at a price of Rs. 16 per share in October 2017 and has also issued bonus shares in the ratio of 6 for 5 in October 2017. Post issue, company’s current paid up equity capital of Rs. 1.14 crore will stand enhanced to Rs. 1.75 crore.
On performance front, AnM has posted turnover/net profits of Rs. 4.39 cr. / Rs. -0.001 cr. (FY15), Rs. 4.53 cr. / Rs. -0.01 cr. (FY16), Rs. 5.24 cr. / Rs. 0.14 cr. (FY17). For first five months of the current fiscal, it has reported net profit of Rs. 0.13 cr. on a turnover of Rs. 2.22 cr. It is surprising that Company has preferred to give just first five months performance instead of first half. For last three fiscals, AnM has posted an average EPS of Rs. 3.10 and an average RoNW of 26.74% based on a paid up equity capital of Rs. 0.17 crore only. Asking price is at a P/BV of around 3.89 based on its NAV of Rs. 16.69 as on 31.08.17 and at a P/BV of around 2.84 on the basis of its post issue NAV of Rs. 22.85. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 36 plus making it an expensive offer. Listed peers are trading in the range of 1 to 31 P/E (page 78 of offer document). Lowest P/E of 1.04 is of Shree Tirupati Balajee FIBC (having a turnover of Rs. 70 crore) and the highest P/E of 31.49 is of Emmbi Ind (having a turnover of Rs. 241 crore).
On merchant banker’s front, this is the 59th mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened around par and the rest with premiums ranging from 1% to 130% on the day of listing. 130% rewards are from the only main board IPO of this merchant banker i.e. Astron Paper.
If compared with peers, AnM has the lowest turnover and the working of last three fiscals is on the basis of its Rs. 0.17 crore equity that is expanding to Rs. 1.75 crore post issue. It issued rights shares at a price of Rs. 16 per share in October 2017 and now wants new investors to part Rs. 65 per share. Investors have better options in secondary market for investment at lower P/Es. Hence there is no harm in giving this issue a miss.
Review By on January 23, 2018
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of A & M Jumbo Bags Ltd. offers an early investment opportunity in A & M Jumbo Bags Ltd.. A stock market investor can buy A & M Jumbo Bags IPO shares by applying in IPO before A & M Jumbo Bags Ltd. shares get listed at the stock exchanges. An investor could invest in A & M Jumbo Bags IPO for short term listing gain or a long term.
Read the A & M Jumbo Bags IPO recommendations by the leading analyst and leading stock brokers.
A & M Jumbo Bags IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the A & M Jumbo Bags IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is A & M Jumbo Bags IPO?"
Our recommendation for A & M Jumbo Bags IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the A & M Jumbo Bags IPO.
The A & M Jumbo Bags IPO allotment status will be available on or around February 7, 2018. The allotted shares will be credited in demat account by February 9, 2018. Visit A & M Jumbo Bags IPO allotment status to check.
