Ambition Mica BSE SME FPO review (Apply)

Ambition Mica Ltd. (AML) is an ISI certified company primarily engaged in manufacturing of mid segment decorative laminates and door skins. AML markets its products under the brand names like Velson, Antique, Art Lam, Antique Aurum, Antique Colour Core and Antique Natural Wood. Door skins are marketed under brand names like Beautique, Texas, Micro Touch, Antique Natural Wood and Door Touch. Company has approximately 1571 designs in laminates and 452 in door skins.

Company came with its maiden offer in July 2015 and is already listed on BSE SME. To part finance its working capital and general corpus fund needs, AML is coming out with a FPO of 3000000 equity shares of Rs. 10 each via book-building route with a price band of Rs. 40-42 to mobilize Rs. 12 to Rs. 12.6 crore (on the basis of lower and upper price bands). Issue opens for subscription on 16.11.17 and will close on 21.11.17. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 20.10% of the post issue paid up capital of the company. Cost of acquisition of shares by promoters is Rs. 3.33 per share. Issue is jointly lead managed by Pantomath Capital Advisors Pvt. Ltd. and Small Industries Development Bank of India (SIDBI). Karvy Computershare Pvt. Ltd. is the registrar to the issue. Raising equity at par between March 2010 and August 2013, it raised further equity via IPO at a price of Rs. 40 per share. It has also issued bonus shares in the ratio of 1 for 1 (May 2016) and 1 for 2 (February 2017). Post issue, its current paid up equity capital of Rs. 11.92 crore will stand enhanced to approx. Rs. 14.92 crore.

On performance front, AML has reported turnover/net profits of Rs. 35.57 cr. / Rs. 0.91 cr. (FY14), Rs. 38.18 cr. / Rs. 1.74 cr. (FY15), Rs. 49.32 cr. / Rs. 1.79 cr. (FY16) and Rs. 51.54 cr. / Rs. 1.99 cr. (FY17). Thus while its top line has seen continuous rising trends, bottom-line has not seen commensurate increase even though it has seen upward movement. Last two fiscal is performance has been mostly stagnant. For H1 of current fiscal, it has posted net profit of Rs. 0.84 crore on a turnover of Rs. 33.63 crore. This indicates pressure on margins as it is in the highly competitive field. For last three fiscals, it has posted an average EPS of Rs. 1.62 and average RoNW of 16.15%. Asking price is at a P/BV of 3.1 plus. If we annualize latest earnings and attribute it on fully diluted equity post issue, then issue is priced at a P/E of around 37 against industry average of 29. Thus issue is aggressively priced.

On merchant banker’s front, this is 54th mandate from Pantomath so far and last 10 listings have given rewards ranging from 0.002% to 20% on debut day in openings.. This is the 3rd mandate from SIDBI so far and last two listings have rewarded with around 13% on debut day in openings.

AML’s scrip has marked high of Rs. 80 and low of Rs. 39.90 in last three years against its maiden offer pricing of Rs. 40 per share. In 2016 it marked low of Rs. 23 (on ex-bonus basis). Last trade on this counter took place at a price of Rs. 50 per share (14.11.17)

Conclusion: Although issue is priced aggressively on the basis of its performances, its faring on bourses makes it an appealing investment. Investment may be considered for medium to long term. (Subscribe).