Review By on June 25, 2016
Zeal Aqua Ltd (ZAL) is engaged in shrimp farming and also engaged in satellite farming whereby it supplies inputs i.e shrimp feeds, shrimp seeds, probiotics and other aquaculture related products etc on credit to small farmers and buys shrimps from these farmers. The Company has approx 1050 satellite farms. The satellite farming enables companies to scale up and multiply its production without putting up physical infrastructure on its own. This flexible model of shrimp production helps it to efficiently manage growing demand of shrimps. After establishing the strong foothold in the shrimp farming and satellite farming activities, as a part of forward integration ZAL is in process of setting up shrimp processing unit for their shrimp including cold storage and primarily to manufacture Individually quick frozen (IQF) shrimp products With the help of this proposed processing unit, ZAL will be in a position to directly sell the finished product (consumable shrimp) to the export market.
At present, it has approx 160 ponds spread over village Mor, Delasa, Mandorai, Cutpore, Nesh, Dandi, Olpad, Orna, Bhagwa, Udhana, etc admeasuring area of approx 200 hectares of land wherein the land on which ponds are constructed for cultivation of shrimp by the Company is in accordance with collaboration agreements with various parities.
To part finance setting up of shrimp processing unit and raise corporate general corpus, the company is coming out with a maiden IPO of 1135000 equity share of Rs. 10 each at a fixed price of Rs. 130 per share to mobilize Rs.14.76 crore. Issue opens for subscription on 27.06.16 and will close on 30.06.16. Minimum application is to be made for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is lead managed by Corporate Strategic Allianz Ltd and Bigshare Services Pvt Ltd is the registrar to the issue. After initial contribution at par in 2009, the company raised further equity between 2011 and 2013 at a price range of Rs. 50 to Rs. 200 per share and has also issued bonus shares in the ratio of 3 for 5 in March 2015. Post IPO its current paid up equity capital of Rs. 3.07 crore will stand enhanced to Rs. 4.20 crore.
On performance front, for last three fiscals the company has posted turnover and net profits of Rs. 72.26 cr./ Rs. 1.41 cr. (FY13), Rs. 136.17 cr. / Rs. 3.50 cr. (FY14), Rs. 171.65 cr./ Rs. 3.07 cr. (FY 15). For first nine months ended on 31.12.15 it has posted net profit of Rs.1.35 crore on a turnover of Rs. 91.58 crore. If we annualized latest earnings and attribute to post IPO equity then the asking price is at a P/E of 30 plus making it a costly bet against industry composite of around 10. Its margins have come down in last two years as appears in performances.
On merchant banker’s front, this is 6th IPO from its stable and has poor track record for past mandates.
Being aggressively priced IPO, only risks aver cash surplus investors may consider investment for long term.
Review By on June 25, 2016
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 Zeal Aqua Ltd. offers an early investment opportunity in Zeal Aqua Ltd.. A stock market investor can buy Zeal Aqua IPO shares by applying in IPO before Zeal Aqua Ltd. shares get listed at the stock exchanges. An investor could invest in Zeal Aqua IPO for short term listing gain or a long term.
Read the Zeal Aqua IPO recommendations by the leading analyst and leading stock brokers.
Zeal Aqua IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Zeal Aqua IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Zeal Aqua IPO?"
Our recommendation for Zeal Aqua IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Zeal Aqua IPO.
The Zeal Aqua IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Zeal Aqua IPO allotment status to check.
