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Review By Dilip Davda on July 7, 2018
Avon Moldplast Ltd. (AML) is engaged in manufacturing of quality plastic molded furniture under the brand name of 'AVON' since 2002. The Company has a fully functional manufacturing facility located at A-7/36-39, South of G. T. Road Industrial Area, Electrosteel Casting Compound, Ghaziabad 201009, Uttar Pradesh. Company’s Product Portfolio includes Molded Chairs, Molded Stools, Molded Tables and Molded Baby Chairs and Baby Desks
To part finance its plans for acquiring additional molds for Chairs, Cupboards, Table etc., working capital and general corpus fund needs, AML is coming out with a maiden IPO of 884000 equity shares of Rs. 10 each at a fixed price of Rs. 51 per share to mobilize Rs. 4.51 crore. Issue opens for subscription on 12.07.18 and will close on 18.07.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Issue constitutes 27.17% of the post issue paid up capital of the company. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Turnaround Corporate Advisors Pvt. Ltd. and Mas Services Ltd. is the registrar to the issue. Having raised most of its equity at par, it issued 80000 shares at a price of Rs. 100 per share (on the basis of Rs. 10 FV) in March 2008 and has also issued bonus shares in the ratio of 2 for 1 in January 2018. Average cost of acquisition of shares by the promoters is Rs. 7.17 and Rs. 7.56 per share. Post issue, AML’s current paid up capital of Rs. 2.37 cr. will stand enhanced to Rs. 3.25 cr.
On performance front, for last four fiscals, AML has posted turnover/net profits of Rs. 6.17 cr. / Rs. 0.05 cr. (FY14), Rs. 8.04 cr. / Rs. 0.04 cr. (FY15), Rs. 10 cr. / Rs. 0.06 cr. (FY16) and Rs. 13.85 cr. / Rs. 0.10 cr. (FY17). For the first 10 months ended on 31.01.18 of FY18 it has earned net profit of Rs.0.69 cr. on a turnover of Rs. 18.92 cr. Thus sudden jump in top and bottom lines for FY18 so far is a bit surprising. For last three fiscals it has posted an average EPS of Rs. 0.31 and an average RoNW of 2.80%. Issue is priced at a P/BV of 4.49 on the basis of its NAV of Rs. 11.37 as on 31.01.18 and at a P/BV of 2.30 on the basis of its post issue NAV of Rs. 22.14. If we annualize latest earnings and attribute it on post issue capital, then asking price is at a P/E of around 20 against industry composite of 28. As per offer documents, it has shown Nilkamal, Supreme Ind., Prima Plastics and Wim Plast as its listed peers that are currently trading at a P/Es of around 20, 33, 33 and 23. (as on 06.07.18). All these peers are way ahead of this company, but company is asking more or less same P/E for its issue. Considering its poor track record, issue is priced very aggressively. Page 69 of the offer document clearly indicates exorbitant pricing in compare with listed peers even as on 31.03.17 working basis. Company’s current debt ratio of 1.09 will stand reduced to 0.47 post this issue.
On merchant banker’s front, this is the first mandate from its stable and has no track record.
Considering poor financial track record and aggressive pricing, Investors may give this issue a miss.
Review By Dilip Davda on July 7, 2018
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 Avon Moldplast Limited offers an early investment opportunity in Avon Moldplast Limited. A stock market investor can buy Avon Moldplast IPO shares by applying in IPO before Avon Moldplast Limited shares get listed at the stock exchanges. An investor could invest in Avon Moldplast IPO for short term listing gain or a long term.
Read the Avon Moldplast IPO recommendations by the leading analyst and leading stock brokers.
Avon Moldplast IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Avon Moldplast IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Avon Moldplast IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Avon Moldplast IPO.
The Avon Moldplast IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Avon Moldplast IPO allotment status to check.
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