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Review By Dilip Davda on April 7, 2024
• The company is in the business of trading in various petroleum based products.
• It also does operation and maintenance job work for ethanol manufacturing in Government owned distilleries.
• The company marked inconsistency in its top and bottom lines for the reported periods.
• It posted lower top and bottom lines for FY24 so far and based on that the issue appears exorbitantly priced.
• There is no harm in skipping this pricey bet.
ABOUT COMPANY:
Greenhitech Ventures Ltd. (GVL) is engaged in trading of various petroleum-based products for the different categories of industries based on their requirement. This includes supply of biofuels, bitumen, light density oils, furnace oils etc. The company is also engaged in Operation & Maintenance as Job worker for Ethanol manufacturing in Government owned distilleries. It understands the market needs and upgrade its team constantly with growing technology and market trends.
GVL provides business solutions and services to consumers of Fuels and other alternative materials across India. The company is engaged in Operation & Maintenance as Job worker for Ethanol manufacturing in Government owned distilleries. Company is not having its owned manufacturing unit. It bids for tender of Government owned distillery for Operation & Maintenance as Job worker for Ethanol manufacturing.
After receipt of tender, the company runs the ethanol plant in government owned distillery and manufactures ethanol and transfer all ethanol manufactured to the respective distillery. Hence there is no procurement and selling of Product for ethanol manufacturing as GVL does the process for transferring to them only.
In Addition, the Ministry of Petroleum and Natural Gas vide its notification dated August 10, 2015 permit the sale of bio-diesel (B-100) for blending with high speed diesel to bulk consumers, in accordance with the standards specified by Bureau of Indian Standards. It believes in qualitative products matching the customer requirements, timely deliverables and cost efficiency and have thereby developed a long-continuing relationship with customers. With the technological drive, continuous research, supplier tie-ups, customer relationships, government support and industry demand for bio-fuel the company is one of key player for supplying of biofuels.
GVL is among one of very few players eligible for Operation and Maintenance of ethanol production in Government managed distilleries. It is capable of running an ethanol distillation in units which run on fuel mode of both ethanol plus grain based raw material. As of January 31, 2024, it had 68 employees on its payroll.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 1260000 equity shares of Rs. 10 each at a fixed price of Rs. 50 per share to mobilize Rs. 6.30 cr. The issue opens for subscription on April 12, 2024, and will close on April 16, 2024. The minimum application to be made is for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.81% of the post-IPO paid-up capital of the company. The company is spending Rs. 0.95 cr. for this IPO process and from the net proceeds of the IPO, it will utilize Rs. 4.50 cr. for working capital, and Rs. 0.85 cr. for general corporate purposes. Based on its IPO price of Rs. 50, the company could have opted for a lot of 2000 shares as per SME pricing table approved by SEBI.
The issue is solely lead managed by Beeline Capital Advisors Pvt. Ltd., and Skyline Financial Services Pvt. Ltd. is the registrar of the issue. Beeline Group's Spread X Securities Pvt. Ltd. is the market maker for the company.
Having issued initial equity capital at par the company issued further equity shares at a fixed price of Rs. 100 per share between June 2023 and July 2023. It has also issued bonus shares in the ratio of 7 for 1 in July 2023. The average cost of acquisition of shares by the promoters is Rs. 12.23 per share.
Post-IPO, company's current paid-up equity capital of Rs. 3.44 cr. will stand enhanced to Rs. 4.70 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 23.50 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue/net profit of Rs. 40.08 cr. / Rs. 0.24 cr. (FY21), Rs. 66.12 cr. / Rs. 1.35 cr. (FY22), and Rs. 25.04 cr. / Rs. 0.57 cr. (FY23). For two broker periods of FY24, for the period from 01.04.23 to 13.05.23, it earned a net profit of Rs. 0.05 cr. on a total revenue of Rs. 1.39 cr. and for the second period from 14.05.23 to 31.01.24, it earned a net profit of Rs. 0.36 cr. on a total revenue of Rs. 3.36 cr. Thus on a combined basis for first 10 months of FY24 ended on January 31, 2024, it earned a net profit of Rs. 0.41 cr. on a total revenue of Rs. 4.75 cr.
For the last three fiscals, it has reported an average EPS of Rs. 2.59, and an average RONW of 25.92%. The issue is priced at a P/BV of 3.77 based on its NAV of Rs. 13.27 as of January 31, 2024, and at a P/BV of 1.90 based on its post-IPO NAV of Rs. 26.31 per share.
If we attribute annualized FY24 earnings to its post-IPO fully diluted paid-p capital, then the asking price is at a P/E of 48.08. Thus the issue appears exorbitantly priced. Small paid-up equity post-IPO also indicates longer gestation period for migration to mainboard.
For the reported periods, the company has posted PAT margins of 0.61% (FY21), 2.04% (FY22), 2.29% (FY23), 3.63% (1.5M-FY24), and 10.62% 8.5M-FY24). However, the RoCE margins data is missing from the offer documents.
DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.
MERCHANT BANKER'S TRACK RECORD:
This is the 35th mandate from Beeline Capital in the last three fiscals, out of the last 10 listings, all opened with a premiums ranging from 5.88% to 200% on the day of listing.
Review By Dilip Davda on April 7, 2024
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 Greenhitech Ventures Limited offers an early investment opportunity in Greenhitech Ventures Limited. A stock market investor can buy Greenhitech Ventures IPO shares by applying in IPO before Greenhitech Ventures Limited shares get listed at the stock exchanges. An investor could invest in Greenhitech Ventures IPO for short term listing gain or a long term.
Read the Greenhitech Ventures IPO recommendations by the leading analyst and leading stock brokers.
Greenhitech Ventures IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Greenhitech Ventures IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Greenhitech Ventures IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Greenhitech Ventures IPO.
The Greenhitech Ventures IPO allotment status will be available on or around April 18, 2024. The allotted shares will be credited in demat account by April 19, 2024. Visit Greenhitech Ventures IPO allotment status to check.
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