Meera Industries BSE SME IPO review (Apply)

Meera Industries Ltd (MIL) is engaged in the manufacturing of Yarn Twisting, Winding and Heat-Setting Machine for textile industries. All the machines are stringently tested at its in-house quality management unit to ensure the flawless performance of the machines. Moreover, various R&D activities are conducted by it to remain abreast of the latest market requirements. MIL caters to the domestic market as well as Exports the products to continents like America, South America, Africa, Europe and Asia and major countries like Germany, Spain, Turkey, Thailand, Belgium, USA etc. Company’s products are sold under the brand name “MEERA”.

To part finance purchase of additional plant and machinery, setting up of new yarn manufacturing facility, meet working capital funding and general corpus fund needs, the company is coming out with a maiden IPO of 1080000 equity share of Rs. 10 each at a fixed price of Rs. 36 per share to mobilize Rs. 3.89 crore. Issue opens for subscription on 27.04.17 and will close on 04.05.17. Minimum application is to be made for 3000 shares and in multiples thereof, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Guiness Corporate Advisors Pvt Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue. It raised initial equity at par value and then issued further capital at a price of Rs. 40 and Rs. 100 per share during 2009 – 2017. It also issued bonus shares in the ratio of 1.5 share for every 1 share held in January 2017. Post issue, its current paid up equity capital of Rs. 2.85 crore will stand enhanced to Rs. 3.93 crore.

On performance front, the company has posted turnover/net profits of Rs. 7.52 cr. / Rs. 0.16 cr. (FY14), Rs. 8.01 cr. / Rs. 0.23 cr. (FY15) and Rs. 8.18 cr. / Rs. 0.49 cr. (FY 16). For first 10 months ended on 31.01.17 of the current fiscal, it has earned net profit of Rs. 0.96 crore on a turnover of Rs. 11.37 crore. If we annualized latest earnings and attribute it on the fully diluted equity post issue then the asking price is at a P/E of around 12 plus (against industry average of 7.4) and at P/BV of 2.4 plus makes it a costly offer.

On merchant banker’s front, this is the 17th mandate from its stable and last 10 listings have shown mixed trends with 4 issues quoting at discount to offer price on the day of listing.

Conclusion: Considering aggressive pricing, only risk savvy cash surplus investors may consider long term investment.

Meera Ind IPO review update as on 24.04.2017

First review was based on the final prospectus data and the P/E ratio was mentioned in my review based on the data of page no. 53 of the referred document. Having learnt IPO review on Chittorgarh.com, with the said P/E ratio, management clarified the matter of P/E ratio in comparison with peers in true senses (although none of the companies are in the same business, but are in similar line of business).

Following data is taken from the listing destination BSE as on 24.04.2017 eve on the basis of December 2016 working and the closing rates on the 24th of April i.e. Monday.

While as per first review its asking price stands at a P/E of 12 plus, the peers are trading in the range of 12.37 to 114.87 P/E and thus the issue is justifiably priced at reasonable levels.

Revised Conclusion: Based on this updated review, investors may consider investment in this issue for short to long term.