Review By on September 19, 2018
• Company is engaged mainly in trading activities.
• It also provides transportation services.
• Its financial data showing inconsistency.
• Issue is priced aggressively.
ABOUT COMPANY:
A-1 Acid Ltd. (A-1) is engaged in the business of trading of high quality industrial acid and Chemicals. It offers a wide range of chemical products which finds variety of applications in the industrial sector like chemical, textile, steel, aluminium, pesticides, fertilizers, intermediates, defence, metals and petro refineries. The company also provides transportation facilities to customers through owned fleet of tankers.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, A-1 is coming out with a maiden IPO of 3000000 equity shares of Rs. 10 each with a fixed price of Rs. 60 per share to mobilize Rs. 18 cr. Issue opens for subscription on 25.09.18 and will close on 01.10.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Guiness Corporate Advisors Pvt. Ltd. while Cameo Corporate Services Ltd. is the registrar to the issue. Issue constitutes 30% of the post issue paid up capital of the company. Its entire equity is issued at par. It has also issued bonus shares in the ratio of 6 for 1 in December 2017. Average cost of acquisition of shares by the promoters is Rs. 0.70 per share. Post issue, its current paid up equity capital of Rs. 7.00 cr. will stand enhanced to Rs. 10.00 cr.
FINANCIAL PERFORMANCE:
On performance front, for last four fiscals, A-1 has posted turnover/net profits of Rs. 97.01 cr. / Rs. 0.13 cr. (FY15), Rs. 85.39 cr. / Rs. 0.92 cr. (FY16), Rs. 105.80 cr. / Rs. 3.00 cr. (FY17) and Rs. 96.17 cr. / Rs. 2.48 cr. (FY18). With inconsistent top lines, it has surprisingly posted bumper profits for FY17 on higher top line of last four fiscals. Issue is priced at a P/BV of 3.05 on the basis of its NAV of Rs. 19.69 as on 31.03.18 and at a P/BV of 1.87 on the basis of post issue NAV of Rs. 32.08. For last three fiscals, it has posted an average EPS of Rs. 3.42 and an average RoNW of 19.69%. If we consider FY18 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of 24 plus. Thus issue is priced very aggressively.
COMPARE WITH LISTED PEERS:
As per offer documents, It has not listed peers to compare with.
MERCHANT BANKER TRACK RECORD:
On merchant banker’s front, this is 27th mandate from its stable in last three fiscals. Out of last 10 listings 1 open at discount and the rest with a premium ranging from 0.14% to 28.72%.
Issue is priced very aggressively discounting all near term positives. Inconsistent financial record of the company raises concern for future working. There is no harm in giving this issue a miss.
Review By on September 19, 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-1 Acid Ltd. offers an early investment opportunity in A-1 Acid Ltd.. A stock market investor can buy A-1 Acid IPO shares by applying in IPO before A-1 Acid Ltd. shares get listed at the stock exchanges. An investor could invest in A-1 Acid IPO for short term listing gain or a long term.
Read the A-1 Acid IPO recommendations by the leading analyst and leading stock brokers.
A-1 Acid IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the A-1 Acid IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is A-1 Acid IPO?"
Our recommendation for A-1 Acid IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the A-1 Acid IPO.
The A-1 Acid IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit A-1 Acid IPO allotment status to check.
