Review By Dilip Davda on September 27, 2018
• Aki is in the business of leather goods manufacturing and marketing.
• Its financial data so far is average.
• LM has poor track records.
• Investment may be considered at your own risk.
ABOUT COMPANY:
AKI India Ltd. (AKI) is engaged in the activities of producing and export of saddlery goods, services of the leather shoes and trading of leather chemicals at domestic level. Changing economic scenario and business conditions, evolving consumer preferences, rapid technological innovations and adoption and globalization are driving it to transform the manner in which the company operates. AKI’s core competencies are its in-house technical knowledge, skilled workforce, diversified product portfolio which enable it to meet varied client requirements. The Company deals in all kinds of footwear’s leather accessories. AKI operates through two distinct business verticals, retail and distribution, each with its predominantly own customer base, sale channels and product range.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, AKI is coming out with a maiden IPO of 2800000 equity shares of Rs. 10 each at a fixed price of Rs. 11 per share to mobilize Rs. 3.08 cr. Issue opens for subscription on 28.09.18 and will close on 03.10.18. Minimum application is to be made for 10000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 27.19% of the post issue paid up capital of the company. Issue is solely lead managed by Finshore Management Services Pvt. Ltd. while Link Intime India Pvt. Ltd. is the registrar to the issue. It has issued entire equity at par and a bonus issue in the ratio of 1 for 2 in December 2017. Average cost of acquisition of shares by the promoters is Rs. 6.67 per share. Post issue, AJI’s current paid up equity capital of Rs. 7.50 cr. will stand enhanced to Rs. 10.30 cr.
FINANCIAL PERFORMANCE:
On performance front, for last four fiscals, AKI has (on a consolidated basis) posted turnover/net profits of Rs. 35.01 cr. / Rs. – (1.08) cr. (FY15), Rs. 42.37 cr. / Rs. 0.17 cr. (FY16), Rs. 43.45 cr. / Rs. 0.11 cr. (FY17) and Rs. 49.13 cr. / Rs. 1.11 cr. (FY18). Thus in FY18 it cleared its carried forward losses and had some surplus. For last three fiscals, it has posted an average EPS of Rs. 0.71 and an average RoNW of 9.33%. Issue is priced at a P/BV of 1.14 on the basis of its NAV of Rs. 9.66 and at a P/BV of 1.10 based on its post issue NAV of Rs. 10.03. If we consider FY18 earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 10.
COMPARE WITH LISTED PEERS:
As per offer documents, it has shown Mirza Int’l., Bhartiya Int’l., and Super Tannery as its listed peers that are currently trading at a P/Es of around xx, xx and xx (as on 27.09.18). However, none of them are strictly comparable with this company.
TRACK RECORD OF MERCHANT BANKER:
On merchant banker’s front, this is the 4th mandate from its stable in last three years. Out of last 3 listings, 2 opened at discount and the 1 with a premium of about 0.2%. Thus it has poor track records.
Although issue appears reasonably priced, considering its average financial data and poor track record of LM, cash surplus, risk savvy investors may consider investment at their own risk.
Review By Dilip Davda on September 27, 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 AKI India Ltd. offers an early investment opportunity in AKI India Ltd.. A stock market investor can buy AKI India IPO shares by applying in IPO before AKI India Ltd. shares get listed at the stock exchanges. An investor could invest in AKI India IPO for short term listing gain or a long term.
Read the AKI India IPO recommendations by the leading analyst and leading stock brokers.
AKI India IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the AKI India IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is AKI India IPO?"
Our recommendation for AKI India IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the AKI India IPO.
The AKI India IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit AKI India IPO allotment status to check.
