Amanaya Ventures BSE SME IPO review (Avoid)

•    AVL is in the business of trading in Gold and Silver bars, coins etc. 
•    For retail customers it has launched a brand called "Aurel Bullion".
•    The company's top and bottom lines are at minuscule levels.
•    Based on its latest earnings, the issue is exorbitantly priced. 
•    There is no harm in skipping this pricey issue. 

ABOUT COMPANY:
Amanaya Ventures Ltd. (AVL) is the result of the amalgamation of two group companies i.e. Amanaya Ventures Ltd. and Midland Services Ltd. as both were engaged in the same line of business. The company is promoting spot buying and selling of Gold across India. 

Thus it is a bullion trader specializing in bars, coins of various sizes and weights of Gold and Silver. It is supplying these commodities wholesale to ornament manufacturers, goldsmiths, jewellers, semi-wholesalers and individual customers. 

It also offers the Aurel Gold Purchase Plan for retail customers in order to enable them to purchase physical gold (brand name Aurel Bullion) in smaller quantities in a transparent, convenient and cost-effective manner. As of the date of filing this offer document, it had 6 employees on its payroll. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden IPO of 1200000 equity shares of Rs.10 each at a fixed price of Rs. 23 per share to mobilize Rs.2.76 cr. The issue opens for subscription on February 24, 2023, and will close on February 28, 2023. The minimum application to be made is for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes xx% of the post-IPO paid-up capital of the company. AVL is spending Rs. 0.26 cr. for this IPO process and from the net proceedings, it will utilize Rs. 2.50 cr. for working capital. 

First Overseas Capital Ltd. is the sole lead manager and Beetal Financial & Computer Services Pvt. Ltd. is the registrar of the issue. Nikunj Stock Brokers Ltd. is the market maker for the company. 

Having issued initial equity shares at par, the company issued further equity shares in the price range of Rs.31 to Rs. 175 per share between December 2009 and July 2022. It has also issued bonus shares in the ratio of 18 for 10 in January 2017 and 69 for 50 in November 2021. The average cost of acquisition of shares by the promoters is Rs. 1.90 per share.

Post-IPO, AVL's current paid-up equity capital of Rs. 2.54 cr. will stand enhanced to Rs. 3.74 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 8.60 cr. A small equity base hints at a longer gestation period for migration to the mainboard.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, AVL has posted a turnover/net profit of Rs. 4.46 cr. / Rs. 0.001 cr. (FY20), Rs. 6.20 cr. / Rs. 0.01 cr. (FY21), and Rs. 13.25 cr. / Rs. 0.08 cr. (FY22). For the first five months of FY23 ended on August 31, 2022, it earned a net profit of Rs. 0.04 cr. on a turnover of Rs. 4.73 cr. 

For the last three fiscals, AVL has reported an average EPS of Rs. 0.22 and an average RoNW of 0.94%. The issue is priced at a P/BV of 2.34 based on its NAV of Rs. 9.84 as of August 31, 2022, and at a P/BV of 1.72 based on its post-IPO NAV of Rs. 13.37 per share.

If we annualize FY23 earnings and attribute it to post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of around 92. 

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy post-listing, based on its financial performance and future prospects. 

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown O P Chains as their listed peers. It is currently trading at a P/E of NA (as of January 04, 2023). However, they are not truly comparable on an apple-to-apple basis. 

MERCHANT BANKER'S TRACK RECORD:
This is the 13th mandate from First Overseas in the last three fiscals (including the ongoing one). Out of the last 10 listings, 1 opened at discount, 2 at par and the rest listed at premiums ranging from 2.50 % to 120.00 % on the listing date.