Review By on September 16, 2014
After three mainline IPOs and 12 BSE SME IPOs post Lok Sabha verdict, now we have a biggest SME IPO for NSE Emerge listing opening on 25.09.14. As per RHP filed by the company this IPO is for a total fund mobilization of Rs. 43.30 crore out of which, it has already raised Rs. 13.33 crore as Pre-IPO placement at a price of Rs. 78 per share and is set to break the ice of SME IPOs on response front.
This is the second IPO from Valentine group that floated its first IPO of Ashapura Intimates Fashion Ltd (AFIL-that markets its products under Valentine brand) for BSE SME listing and has given rewards to its investors and currently quoting above Rs. 150 against an offer price of Rs. 40 per share. Now its subsidiary Momai Apparels Ltd (MAL) is turning separate entity and bringing out its maiden IPO for NSE Emerge listing. Details of this IPO are as under:
Momai Apparels is engaged in the manufacturing of non-branded intimate garments such as loungewear, bridal night wear, honeymoon sets, kid’s undergarments, seasonal wears, bathrobes, night wears, sportswear, leggings, camisole, slips and women’s innerwear. Currently it exclusively supplies major portion of products to AFIL but it has geared up to supply its products to other customers as well. MAL currently manufactures products for brands like Valentine, NLine, N&D and Valentine Sports etc. It has over 2 lakh sq. ft facility at Bhiwandi, near Thane for manufacturing of garments. Now the company proposes to expand its existing capacities of 3250000 nos to five fold (16250000 nos for all product mix) to meet the rising demand for its products and gearing to set up new facility at Gujarat. Of the expanded capacity, the company has earmarked 85% for domestic markets and the rest for global markets. Currently no single garment manufacturer has the variety of products matching to this company’s product list. MAL has succeeded in creating a niche place in this segment and hopes to widen the market share.
To part finance this project along with working capital requirements, it is coming out with IPO of approx 55,63,000 equity shares of Rs. 10 each in a price band of Rs. 78-90. Issue opens for subscription on 25.09.14 and will close on 30.09.14. Minimum application is to be made for 1600 shares and in multiples thereof, thereafter. Issue has been granted 'CARE SME Fundamental Grade 4 /5’ by CARE indicating very strong fundamentals. Issue is solely managed by Pantomath Capital Advisors (P) Ltd and Link Intime India (P) Ltd is the registrar to the offer. Post allotment, shares will be listed on NSE SME platform EMERGE.
On performance front, the company’s turnover improved from Rs. 31.53 crore in 2011-12 to Rs. 117.45 crore in 2013-14 and net profit too jumped from Rs. 0.58 crore to Rs. 3.27 crore. Its equity of Rs. 1.53 crore as on 31.3.13 enhanced to Rs. 8.87 crore as on 31.3.14 with issue of bonus shares and preferential issue at a price of Rs. 27 per share. Last three fiscal’s weighted average EPS stood at Rs. 24.73. For the fiscal 2013-14, weighted average EPS stands at Rs. 5.96. Last three financial year’s CAGR for top line is 55% and bottom line is 78%.
Based on weighted average EPS of FY 13-14 and existing equity the asking price of the issue ranges between 13-15 P/E and if it is attributed on enhanced equity post IPO then it is between 18-20 P/E.
On merchant banker’s front, this is the fourth issue out of six IPOs in public domain and based on the track record, it appears, Pantomath is the sincere player in SME segment with projects having fundamentals. This merchant banker is not only first in bringing SME IPOs for both BSE and NSE, but is also taking lead in promoting SME sector with many initiatives in this regards.
Despite entry barriers of SME IPOs pre and post mode basis and poor support from primary market operators, long term investors should grab it as it is another mini Page Industries in the offing.
(Disclaimer: Author has no plans to invest in this IPO)
Review By on September 16, 2014
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 Momai Apparels Ltd. offers an early investment opportunity in Momai Apparels Ltd.. A stock market investor can buy Momai Apparels IPO shares by applying in IPO before Momai Apparels Ltd. shares get listed at the stock exchanges. An investor could invest in Momai Apparels IPO for short term listing gain or a long term.
Read the Momai Apparels IPO recommendations by the leading analyst and leading stock brokers.
Momai Apparels IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Momai Apparels IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Momai Apparels IPO?"
Our recommendation for Momai Apparels IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Momai Apparels IPO.
The Momai Apparels IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Momai Apparels IPO allotment status to check.
