Anmol India BSE SME IPO review (May apply)

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Review By Dilip Davda on February 6, 2019

•    Anmol India is in the business of coal trading. It imports coal and supplied to medium and small industries.
•    Coal is high volatile commodity and impacted by Government policies.
•    It derives benefits from its long standing contacts with coal suppliers and user industry.
•    Based on financial parameters, issue appears fully priced.

ABOUT COMPANY:
Anmol India Ltd. (AIL) is dealing in coal import and supply business. With its quality supply and better service, it has become the most preferred trusted brand among its suppliers/customers. The company that was initially servicing only brick kiln industry and coal traders today caters to the demand of varied industries with a supply of coal and pet coke. The prime product of AIL is USA Coal. It also supplied Indonesian Coal, petroleum coke. Small and medium scale manufacturers are the prime customers of AIL. The company is dealing in a high volatile commodity and also impacted by Government policies.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, AIL is coming out with a maiden IPO of 3100000 equity shares of Rs. 10 each at a fixed price of Rs. 33 per share. The company mulls mobilizing Rs. 10.23 crore through this issue. It opens on 12.02.19 and will close on 14.02.19. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 29.86% of the post issue paid up capital of the company.

Issue is solely lead managed by Share India Capital Services Pvt. Ltd. while Bigshare Services Pvt. Ltd. is the registrar to the issue. Having issued initial equity at par, it raised further equity at a price of Rs. 50 per share between March 2010 and March 2012. It has also issued bonus shares in the ratio of 2 shares for every 1 share held in July 2018. Average cost of acquisition of shares by the promoters is Rs. 3.33 per share. Post issue, AIL's current paid up equity capital of Rs. 7.28 cr. will stand enhanced to Rs. 10.38 cr.

FINANCIAL PERFORMANCE:
On performance front, for last three fiscals, AIL has posted turnover/net profits of Rs. 189.81 cr. / Rs. 0.83 cr. (FY16), Rs. 186.50 cr. / Rs. 1.09 cr. (FY17) and Rs. 299.24 cr. / Rs. 2.62 cr. (FY18), For first half of FY19it has earned net profit of Rs. 1.72 cr. on a turnover of Rs. 263.06 cr. For last three fiscals, it has posted an average EPS of Rs. 2.49 and an average RoNW of 17.54%. Issue is priced at a P/BV of 2.12 on the basis of its NAV of Rs. 15.56 as on 31.03.18 and at a P/BV of 1.47 on the basis of post issue NAV of Rs.22.42. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 10 against industry average of 12. Thus issue appears fully priced.

AIL was able to abstract PAT margins of 0.65% (H1FY19), 0.88% (FY18), 0.58% (FY17), 0.44% (FY16). The reason for jump in top and bottom line is due to focus on corporate sector, penetration of in-house app 'Anmol Coal' and better business environment for FY18. As company gains in size and strength, it will be able to attract corporate customers which demand on-time product delivery and provide demand visibility. This helps the company in bargain better rate from source and is able to service retail clients directly which provides better margin.

COMPARISION WITH LISTED PEERS:
As per offer documents, it has shown Coal India and GMDC as its listed peers. They are currently trading at a P/Es of around 13.7 and 6 (as on 05.02.19). However, they are not strictly comparable as Anmol is engaged in coal trading activities only. .

MERCHANT BANKER'S TRACK RECORD:
On merchant banker's front, this is the first mandate from Share India Capital and it has not past track record.

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