Mangalam Seeds Ltd - BSE SME IPO review (Apply)

Mangalam Seeds Ltd (MSL) is engaged in producing and delivering high quality seeds by use of agriculture generic techniques and is the most preferred seed brand in India in major crops like cumin seeds, castor seeds, fennel seeds, lucerene seeds, sesame seeds, fodder bajra seeds etc. The company is offering a wide range of seeds categorized as 'research seeds' and 'hybrid seeds'. It has a collection of around 976 varieties of germplasm in various crops and its products are marketed under the brand names like Eklavya, Volina, Leetos, Juddo etc. It has obtained 15 trademarks and has already applied for 65 other brand names and logos.  It has its own R & D facility and a strong marketing channel. It has set a target to be PAN India Company and expand its horizons from Gujarat and Rajasthan regions. 

To achieve the benefits of listing and raising general corpus fund, the company is coming out with a maiden IPO of 1140000 equity shares of Rs. 10 each at a fixed price of Rs. 50 per share to mobilize Rs. 5.70 crore. Issue opens for subscription on 29.07.15 and will close on 31.07.15. Minimum application is to be made for 3000 and in multiples thereon, thereafter. Sole manager to this issue is Pantomath Capital Advisors Pvt Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE SME.  After incorporation equity issue at par, it issued further capital at a price of Rs. 100 per share in February 2004 and March 2014 and then at a price of Rs. 50 per share in March and May 2015. It has also issued bonus shares twice, 5 for 2 in March 2015 and 13 for 6 in May 2015. It's paid up equity of Rs. 0.93 crore rose to Rs. 3.16 crore with preferential issue at Rs. 50 per share as well as a bonus issue in the month of May 2015. Post IPO its current paid up equity capital of Rs. 3.16 crore will stand enhanced to Rs. 4.30 crore.

On performance front, for last three fiscals the company has posted turnover and net profits of Rs. 11.85 crore/Rs. 0.10 crore (FY 2013), Rs. 14.83 crore/Rs. 0.12 crore (FY 2014) and Rs. 17.03 crore/Rs. 1.20 crore (FY 2015) with an average EPS of Rs. 2.63 for last three fiscals. In FY 2015 it shifted its focus on agriculture activity that had a lion share in revenues (Rs. 12.60 crore).  Based on 31.3.15 equity the asking price at a P/E of 10 plus, but if we attribute the FY 2015 earnings on fully diluted equity post IPO, then the asking price is at a P/E of around 18, that augurs well against industry average of 42.

On sole lead manager's front, this is the 12th IPO from its stable and past mandates have good track records.