Anya Polytech NSE SME IPO review (Apply)

•    The company is engaged in the business of manufacturing high-quality HDPE/PP Bags and Zinc Sulphate fertilizers.
•    It is primarily servicing B2B segment and enjoys most preferred partner.
•    The company is planning to serve B2C segment which is a high margin opportunity.
•    The company is benefited from its cost control management.
•    Based on FAY25 annualized earnings the issue appears reasonably priced.
•    Investors may park funds for the medium to long term. 

ABOUT COMPANY: 
Anya Polytech & Fertilizers Ltd. (APFL) is engaged in the business of manufacturing of high-quality HDPE & PP bags (made from HDPE granules) and Zinc sulphate Fertilizers in primarily two categories; i.e., (i) Mono Hydrate and (ii) Hepta Hydrate. It is also engaged in the manufacturing of Micronutrient Mixture. Apart from manufacturing, the company also engaged in the trading of Single Super Phosphate (SSP), Organic Potash, Zinc EDTA (Ethylene Diamine Tetra Acetate Acid), PROM (Phosphate rich organic manure), Ferus Sulphate, Magnesium Sulphate, Micronutrient Mixture, Copper Sulphate Certified Seeds and Cattle feed.

APFL is also engaged in the business of Single Super Phosphate (SSP) Fertilizers through its subsidiary Arawali Phosphate Limited. Further, from the Net Proceeds, it is proposing to set up 1 x 2 TPH Biofuel Pellet Plant under subsidiary i.e. Yara Green Energy Private Limited. The company is ISO 9001: 2015 certified for quality management system by Bureau of International Quality Standard Pte. Ltd. The quality certification is towards Manufacturing of HDPE & PP Woven Sacks, Fabric and Industrial Packaging and Manufacturer of Zinc Sulphate, Micronutrient mixture, ferrous Sulphate etc. As of June 30, 2024, it had 114 employees on its payroll, and engages contract workers as and when needed.

According to the management, the company is primarily engaged in B2B segment and enjoys most preferred partner status. It is eyeing venturing in to B2C segment going forward, which is a high margin area. The proposed expansion to add more capacities to meet rising demand and also introduce new products. With the cost control management, the company has raised its margins and the trends are likely to continue.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 32000000 equity shares of Rs. 2 each to mobilize Rs. 44.80 cr. at the upper cap. It has announced a price band of Rs. 13 – Rs. 14 per share. The issue opens for subscription on December 26, 2024, and will close on December 30, 2024. The minimum number of shares to be applied is for 10000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.67% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, the company will utilize Rs. 12.69 cr. for capex on purchase on plant and machinery and working capital, Rs. 10.80 cr. for setting up new project in Yara Green Energy Pvt. Ltd., Rs. 8.50 cr. for working capital and capex in Arawali Phosphate Ltd., and the rest for general corporate purposes. 

The IPO is solely lead managed by Beeline Capital Advisors Pvt. Ltd., and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Spread X Securities Pvt. Ltd., is the Market Maker, and also the syndicate member.

The company has issued entire equity shares at par value so far. The average cost of acquisition of shares by the promoters is Rs. 3.64 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 17.60 cr. will stand enhanced to Rs. 24.00 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 168.00 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 91.98 cr. / Rs. 0.70 cr. (FY22), Rs. 116.02 cr. / Rs. 5.71 cr. (FY23), and Rs. 125.06 cr. / Rs. 9.98 cr. (FY24). For Q1 of FY25 ended on June 30, 2024, it earned a net profit of Rs. 4.54 cr. on a total income of Rs. 40.73 cr. The sudden boost in its bottom lines from FY23 onwards raises eyebrows.

For the last three fiscals, the company has reported an average EPS of Rs. 0.74 and an average RoNW of 19.07%. The issue is priced at a P/BV of 2.96 based on its NAV of Rs. 4.73 as of June 30, 2024, and at a P/BV of 1.81 based on its post-IPO NAV of Rs. 7.73 per share (at the upper cap).

If we attribute FY25 annualized super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 9.27, and based on FY24 earnings, the P/E stands at 16.87.  The issue relatively appears reasonably priced. 

For the reported periods, the company has posted PAT margins of 0.76% (FY22), 4.08% (FY23), 7.76% (FY24), 10.92% (Q1-FY25), and RoCE margins of 5.03%, 10.69%, 16.47%, 8.82%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer documents. It will adopt a prudent dividend policy, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has Commercial Syn Bag, as their listed peers. It is trading at a P/E of 38.4 (as of December 23, 2024). However, they are not truly comparable on an apple-to-apple basis. 

MERCHANT BANKER’S TRACK RECORD:
The merchant banker associated with this issue had handled 51 issues in the last three fiscals, out of which 2 issues closed below the issue price on listing date.