Essex Marine BSE SME IPO review (Not Rated)

•    The company is engaged in producing processed fish and shrimp and exporting frozen sea foods.
•    It suffered a set-back for FY24 with lower top and bottom lines.
•    Based on its recent financial data, the issue appears aggressively priced.
•    It is operating in a highly competitive and fragmented segment.
•    Only well-informed/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Essex Marine Ltd. (EML) is a producer of processed fish and shrimp headquartered in Kolkata, West Bengal. Its main processed seafood comprised of different varieties of marine fish and shrimp as well as aquaculture vannamei shrimp. The company exports frozen fish and shrimps from India under its brand name “Essex”. EML has over 16 years of history in fish and shrimp processing and selling of processed frozen fish and shrimp with varying degrees of value addition to its customers to China, Europe and Israel. Its major customers are in China and Europe, which includes food service distributors and warehouse chains. In addition, the company also undertakes job work for different merchant exporters to ensure it is running processing plant at optimal capacity. The Company is a “One Star Export House”.

EML is an integrated player across the processed frozen fish and shrimp supply chain from raw fish and shrimp procurement, processing, and overseas distribution to customers. It procures raw fish and shrimp primarily from landing centres and aquaculture farmers in the eastern coast of India. Its modern processing facility is strategically located at Shankarpur close to Digha, which is one of the biggest landing centres in the eastern coast of India. Its processing unit is situated at Shankarpur Road, Kaluya Sanda, Kuliyata, West Bengal 721441. Shankarpur is within the district of Purba Medinipur wherein the highest quantity of Vannamei aquaculture is produced. As of March 31, 20-25, it had installed capacity of 5717 MTPA for Shrimps, 4258 MTPA for Fish, and 3942 MTPA for Peeling capacity.

Further, it also operates a dry and cold store centrally located in Kolkata for storing of varieties of frozen food items. Its dry and cold store is situated at Udayan Industrial Estate, 3, Pagla Danga Rd, Tangra, Kolkata – 700015, West Bengal. The dry and cold store is having a capacity of 1800 MT.

The company has benefitted from repeat orders from customers in the past three years and stub period. This reflects the quality of its products. This demonstrates quality, reliability and cost efficiencies that it delivers to customers. It has an extensive marketing and sales reach to ensure continuous sales and connect with buyers. The Company stays in constant touch with buying agents of international buyers. Its business is subject to seasonal variations. As of March 31, 2025, it had 91 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 4262000 equity shares of Rs. 10 each at a fixed price of Rs. 54 per share to mobilize Rs. 23.01 cr. The IPO opens for subscription on August 04, 2025, and will close on August 06, 2025. The minimum application to be made is for 4000 shares and in multiple of 2000 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 27.92% of post-IPO paid-up equity capital of the company. The company is spending Rs. 3.17 cr. (13.77%) for this IPO process, and from the net proceeds of the issue, the company will utilize Rs. 2.48 cr. for expansion of existing peeling capacity, Rs. 0.78 cr. for setting up of “ready-to-cook” section by adding blanching in the existing process, Rs. 6.00 cr. for working capital, Rs. 7.15 cr. for repayment/prepayment of certain borrowings, and Rs. 3.43 cr. for general corporate purposes.

The IPO is solely lead managed by Khandwala Securities Ltd., while Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Gretex Share Broking Ltd. is the market maker. The issue is underwritten to the tune of 15.02% by Khandwala Securities and 84.98% by Prabhat Financial.

The company has issued entire initial equity shares at par, it also issued bonus shares in the ratio of 1 for 1 in February 2025. The average cost of acquisition of shares by the promoters is Rs. 5.00, and Rs. 5.08 per share. It has emptied the coffin before IPO, leaving minuscule reserves for new investors.

Post-IPO, company’s current paid-up equity capital of Rs. 11.00 cr. will stand enhanced to Rs. 15.26 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 82.41 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total Income/Net Profit of Rs. 23.59 cr. / Rs. 2.03 cr. (FY23), Rs. 21.11 cr. / Rs. 1.82 cr. (FY24), and Rs. 39.93 cr. / Rs. 4.67 cr. (FY25). It marked a set-back for FY24.

For the last three fiscals, the company has reported an average EPS of Rs. 2.98, and an average RoNW of 20.88%. The issue is priced at a P/BV of 3.36 based on its NAV of Rs. 16.07 as of March 31, 2025, and at a P/BV of 2.03 based on its post-IPO NAV of Rs. 26.66 per share.

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 17.65, and based on its FY24 earnings, the P/E stands at 45.38. Thus, based on its recent financial data, the issue appears aggressively priced.

The company has reported PAT margins of 9.25% (FY23), 9.52% (FY24), 12.53% (FY25), and RoCE margins of 17.14%, 14.40%, 18.87%, respectively for the referred periods.

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

COMPARISON WITH LISTED PEERS:
As per offer document, the company has shown Kings Infra, and Zeal Aqua, as their listed peer. They are trading at a P/E of around 27.9, and 13.8 (as of August 01, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORDS:
This is the 10th mandate from Khandwala Securities in the last three fiscals (including the ongoing one). From the last 9 listings, 3 opened at discount, 2 at par and the rest with premium ranging from 7.35% to 90% on the date of listing.