Artedz Fabs NSE SME IPO review (May apply)

• IPO Details
• Stock Price
• Docs
  • RHP
  • DRHP
• Reviews
• Subscription
• News
• GMP
• Allotment
• BoA
• Messages

Review By Dilip Davda on March 15, 2019

• AFL has created a niche place in made to order cotton fabrics.
• It operates on the just-in-time concept to manage inventory levels with maximum cost benefits.
• The issue is priced reasonably at a P/E of around 6.
• Lead Manager has an average track record.

ABOUT COMPANY:
Artedz Fabs Ltd. (AFL) is engaged in manufacturing and trading of textile fabrics for shirting and suiting. It specializes in the manufacturing of textile fabrics majorly from cotton yarn, linen yarn as well as blended yarn as raw material. AFL is primarily engaged in the manufacturing of grey fabrics with high-end and fashion-forward designs using its in-house expertise designing team. The company caters to both domestic and international markets. Its current installed capacity is of 21 lakhs sq. mtrs. Per annum with 43 installed looms. It specializes in tailor-made fabrics as demanded by the markets with changing fashion. If follows just-in-time concept for managing its inventory levels that helps it in curtailing costs and thus operating on made to order business model.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, AFL is coming out with a maiden IPO of 2310000 equity shares of Rs. 10 each via book building process with a price band of Rs. 34 – Rs. 36 per share to mobilize Rs. 7.85 cr. – Rs. 8.32 cr. (based on lower and upper price bands). Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. The issue opens for subscription on 18.03.19 and will close on 20.03.19. Post allotment, shares will be listed on NSE SME Emerge.

The Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. while Bigshare Services Pvt. Ltd. is the registrar to the issue. Pantomath Stock Brokers Pvt. Ltd. is acting as the market maker for this issue.

The Issue constitutes 26.99% of the post issue paid up capital of the company. AFL has issued entire equity at par and has also issued bonus shares in the ratio of 1 share for every 6 shares held in September 2010. The average cost of acquisition of shares by the promoters is Rs. 8.92 and Rs. 15.82 per share. Post issue AFL's current paid up equity capital of Rs. 6.25 cr. will stand enhanced to Rs. 8.56 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, AFL has posted a turnover/net profit (loss) of Rs. 38.78 cr. / Rs. – (0.36x) cr. (FY16), Rs. 53.11 cr. / Rs. 1.79 cr. (FY17) and Rs. 64.34 cr. / Rs. 3.52 cr. (FY18). For H1 of FY19, it has earned a net profit of Rs. 2.54 cr. on a turnover of Rs. 36.63 cr. For the last three fiscals, it has posted an average EPs of Rs. 3.67 and an average RoNW of 31.68%. The issue is priced at a P/BV of 2.07 (based on upper price band) considering NAV of Rs. 17.35 as on 30.09.18.

If we annualize latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 6, thus it is reasonably priced.

COMPARE WITH LISTED PEERS:
As per offer documents, it has considered VTM and Donear as its listed peers that are currently trading at a P/Es of around 11 and 16 (as on 15.03.19) However, they are not strictly comparable.


MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's front, this is the 78th mandate from its stable. Out of last 10 listings; all opened at premiums ranging from 0.5% to 8% on the day of listings.

Artedz Fabs IPO FAQs