Review By on April 6, 2018
Bombay Super Hybrid Seeds Ltd. (BSHS) is engaged in dealing of premium quality agricultural seeds covering 27 crops and 111 varieties and catering to Gujarat, Maharashtra, Rajasthan, Madhya Pradesh, Andhra Pradesh and Karnataka. It has a net work of 350 dealers and also has seed processing unit and seed testing laboratory.
To part finance its repayment of loan, working capital and general corpus fund needs, BSHS is coming out with a maiden IPO of 1732000 equity shares of Rs. 10 each at a fixed price of Rs. 60 per share to mobilize Rs. 10.39 crore. Issue opens for subscription on 12.04.18 and will close on 17.04.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Monarch Networth Capital Ltd. and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.41% of post issue paid up capital of the company. After raising initial equity at par, it raised further equity at a price of Rs. 17 per share. Average cost of acquisition of shares by the promoters is Rs. 12.72 and Rs. 12.97 per share. Post issue, its current paid up capital of Rs. 4.83 crore will stand enhanced to Rs. 6.56 crore.
On performance front, BSHS has posted turnover/net profits of Rs. 30.13 cr. / Rs. 0.25 cr. (FY14), Rs. 31.33 cr. / Rs. 0.04 cr., (FY15), Rs. 63.13 cr. / Rs. 0.27 cr. (FY16) and Rs. 109.70 cr. / Rs. 0.80 cr. (FY17). For first nine months of the current fiscal, it has earned net profits of Rs. 0.87 cr. on a turnover of Rs. 72.91 cr. Thus for FY14 and FY15 it posted static turnover with wild swing in bottom lines. Thereafter, it has marked steady growth in top and bottom lines. For last three fiscals it has posted an average EPS of Rs. 1.47 and an average RoNW of 11.54%. Issue is priced at a P/BV of 3.77 based on its NAV of Rs. 15.91 as on 31.12.17. If we annualize latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 34 against industry average of 30. As per offer documents, it has shown listed peers as Mangalam Seeds, Kaveri Seeds, Monsanto, R J Bio, Camson Seeds, Omega AG that are trading at a P/E of around 37, 26, 33,NA, 14, 500 respectively as on 06.04.18 closings. Considering industry average, issue is aggressively priced.
On merchant banker’s front, this is the 6th mandate from its stable in last six fiscals. Out of last 5 listings, 1 opened at par and the rest 4 with a premium ranging from 1.4% to 45% on the day of listing. IPO of VCU Data that opened at Rs. 36.25 against offer price of Rs. 25 per share is currently trading around Rs. 14 per share (as on 04.04.18).
Although company has shown better top and bottom lines for recent years, considering aggressive pricing, cash surplus investors may consider investment for long term.
Review By on April 6, 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 Bombay Super Hybrid Seeds Ltd. offers an early investment opportunity in Bombay Super Hybrid Seeds Ltd.. A stock market investor can buy Bombay Super Hybrid Seeds IPO shares by applying in IPO before Bombay Super Hybrid Seeds Ltd. shares get listed at the stock exchanges. An investor could invest in Bombay Super Hybrid Seeds IPO for short term listing gain or a long term.
Read the Bombay Super Hybrid Seeds IPO recommendations by the leading analyst and leading stock brokers.
Bombay Super Hybrid Seeds IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Bombay Super Hybrid Seeds IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Bombay Super Hybrid Seeds IPO?"
Our recommendation for Bombay Super Hybrid Seeds 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 Bombay Super Hybrid Seeds IPO.
The Bombay Super Hybrid Seeds IPO allotment status will be available on or around April 20, 2018. The allotted shares will be credited in demat account by April 24, 2018. Visit Bombay Super Hybrid Seeds IPO allotment status to check.
