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Review By Dilip Davda on November 7, 2019
• The company is engaged in the manufacturing of fixed packaging products.
• APL is also trading in Gum (Turpentine and Dipentene)
• The offer includes minuscule part of fresh equity for working capital.
• Issue pricing appears lucrative with super earnings of pre-IPO and IPO year.
PREFACE:
After witnessing dry spell for the month of October 2019, we are once again gearing for some activities for the primary market. As per reports around three SME IPOs and four Main Board IPOs are gearing to tap the market. Anuroop Packaging is breaking the ice with its tiny offer of Rs. 2.64 cr. for listing on BSE SME. However, although APL announced its IPO opening for 8th November 2019 on Monday i.e. 04.11.19, non-availability of offer documents till 2.30 pm of 7th November 2019, delayed our review process.
ABOUT COMPANY:
Anuroop Packaging Ltd. (APL) is a corrugated box manufacturer providing quality fixed packaging products. Its product portfolio includes corrugated boxes, sheets, boards. The product is supplied to a variety of industrial customers engaged in pharma, stationery, metal etc. APL's client list includes Kokuyo Camlin, A W Faber-Castel, Himalaya Organics, Ion Exchange, Mattel Toys, FDC, Pepe Jeans etc. Besides this, APL is also engaged in trading of Gum (Turpentine and Dipentene).
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital (Rs. 0.43 cr.) needs, APL is coming out with a maiden IPO of 2030000 equity shares of Rs. 10 each via a combo of fresh equity issue and OFS. It has fixed the of Rs. 13 per share and mulls mobilizing Rs. 2.64 cr. The issue opens for subscription on 08.11.19 and will close on 13.11.19. APL is issuing fresh equity capital of 330000 shares and offer for sale (OFS) of 1700000 shares. Minimum application is to be made for 10000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 26.50% of the post issue paid-up capital of the company. The issue is solely lead managed by Gretex Corporate Services Pvt. Ltd. while Karvy Fintech Pvt. Ltd. is the registrar to the issue. Gretex Share Broking Pvt. Ltd. is the market maker for this issue. APL is spending Rs. 0.61 cr. (23.11% of the gross issue proceeds).
Having issued/converted initial equity at par, APL issued further equity in the price range of Rs. 18 per share in August 2018. It has also issued bonus shares in the ratio of 3 for 3 in July 2018. The average cost of acquisition of shares by the promoters is Rs. 4.92, Rs. 6.08, Rs. 9.08 and Rs. 11.57 per share. Post issue, GIL's current paid-up equity capital of Rs. 7.33 cr. will stand enhanced to Rs. 7.66 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, on a standalone basis, APL has posted turnover/ net profits of Rs. 2.58 cr. / Rs. 0.03 cr. (FY17), Rs. 3.97 cr. / Rs. 0.73 cr. (FY18) and Rs. 6.68 cr. / Rs. 1.37 cr. (FY19). The current holding period for trade receivables is above 104 days. For the last three fiscals, APL has (on a standalone basis) posted an average EPS of Rs. 2.16 and an average RoNW of 17.10%. As APL has gone in for merger process, on a consolidated basis for FY19 it has reported a turnover of Rs. 10.00 cr. with a net profit of Rs. 1.79. For Q1 of FY20, it has posted a turnover/net profit of Rs. 2.78 cr. / Rs/ 0.56 cr. (on a consolidated basis) and Rs. 1.94cr. / Rs. 0.40 cr. (on a standalone basis).
The issue is priced at a P/BV of 0.94 based on its NAV of Rs. 13.78 (consolidated basis) as on 30.06.19. If we annualized FY20 (consolidated) earnings and attribute it to fully diluted post issue equity then asking price is at a P/E of around 3.17. Thus issue pricing looks attractive with its super earnings in pre-IPO and IPO year. Sustainability of the same is a major concern.
COMPARISION WITH LISTED PEERS:
As per the offer documents, APL has shown Worth Peripherals as its listed peer that is currently trading at a P/E of around 5.3 (as on 07.11.19). However, it is not strictly comparable.
MERCHANT BANKER'S TRACK RECORD.
On merchant banker's front, this is the 19th mandate from its stable in the last four fiscals (including the ongoing). Out of last ten listing, one opened at par and the rest with premiums ranging from 1.92% to 8% on the day of listings. Thus it has an average track record.
Merchant Banker /Underwriter is arranging funds for this IPO as APL is spending nearly 23% of the issue proceeds and thus subscription for this IPO is assured.
Review By Dilip Davda on November 7, 2019
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Anuroop Packaging Ltd offers an early investment opportunity in Anuroop Packaging Ltd. A stock market investor can buy Anuroop IPO shares by applying in IPO before Anuroop Packaging Ltd shares get listed at the stock exchanges. An investor could invest in Anuroop IPO for short term listing gain or a long term.
Read the Anuroop IPO recommendations by the leading analyst and leading stock brokers.
Anuroop IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Anuroop IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Anuroop IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Anuroop IPO.
The Anuroop IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Anuroop IPO allotment status to check.
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