Review By on August 30, 2017
A&M Febcon Ltd (AMF) is engaged in the services of engineering which is applied to the planning, designing and control of industrial operations and in the business of Industrial equipment and metal fabrication. Industrial equipment fabrication is the most complex out of the three i.e. structural, commercial and industrial which is used primarily to develop industrial machinery. AMF's equipments and machineries are manufactured through industrial fabrication that include boilers, storage tanks, heat exchangers, columns, and towers etc, collectively called as process plant equipments. These process plant equipments are widely used in petrochemical plants, oil and gas refinery, metal industry, cement plants, pulp & paper manufacturing plants etc.
To part finance its working capital and general corporate funds needs, AMF is coming out with a maiden IPO of 3712000 equity shares of face value of Rs. 10 each at a fixed price of Rs. 18 per equity share to mobilize Rs. 6.68 crore. Issue opens for subscription on 01.09.17 and will close on 06.09.17. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Gretex Corporate Services Pvt. Ltd and Karvy Computershare Pvt. Ltd. is the registrar to the issue. The issue will constitute 40.56% of the post issue paid up equity share capital of the company. Since incorporation till December 2014 it issued entire equity at par. Thereafter it raised further equity at a price of Rs. 18 per share from January 2017 to March 2017 and also issued bonus shares in the ratio of 1 for 2. Post issue, its current paid up equity capital of Rs. 5.44 crore will stand enhanced to Rs. 9.15 crore.
On performance front, for last four fiscals AMF has posted turnover/net profits of Rs. 2.95 cr. / Rs. 0.01 cr. (FY14), Rs. 5.22 cr. / Rs. 0.04 cr. (FY15), Rs. 8.27 cr. / Rs. 0.03 cr. (FY16) and Rs. 10.01 cr. / Rs. 0.45 cr. (FY17). Thus a sudden jump in bottom line is seen for the concluded fiscal. If we attribute latest earnings on fully diluted equity post issue then asking price is at a P/E of 36 plus. Issue is priced at a P/BV of 1.2 and last three fiscal's average RoNW is 5.42%. Thus issue is highly priced and having no justification on performance parameters as well. As claimed by the management, it has no listed peers to compare with.
On merchant banker's front, this is the 6th mandate from its stable and out of last four listings two issues opened at discount, one at par and one with mere premium.
Conclusion: Considering track record and aggressive pricing, there is no harm in giving this IPO a miss.
Review By on August 30, 2017
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 Febcon Ltd. offers an early investment opportunity in A & M Febcon Ltd.. A stock market investor can buy A & M Febcon IPO shares by applying in IPO before A & M Febcon Ltd. shares get listed at the stock exchanges. An investor could invest in A & M Febcon IPO for short term listing gain or a long term.
Read the A & M Febcon IPO recommendations by the leading analyst and leading stock brokers.
A & M Febcon IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the A & M Febcon IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is A & M Febcon IPO?"
Our recommendation for A & M Febcon IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the A & M Febcon IPO.
The A & M Febcon IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit A & M Febcon IPO allotment status to check.
