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Review By Dilip Davda on June 8, 2019
• MIL came with maiden IPO in April 2017 and rewarded handsomely in the long term.
• FPO is priced very aggressively and is higher than the last traded price.
• Maiden IPO was lead managed by Guiness Corporate Advisors Pvt. Ltd. (Guiness group is currently facing suspension).
• This issue is lead managed by Aryaman Financial that has poor track records.
ABOUT COMPANY:
Meera Industries Ltd. (MIL) that came with its maiden BSE SME IPO to mobilize Rs. 3.89 crore in April 2017 is now once again tapping the primary market with its Fresh Public Offer (FPO). IPO was lead managed by Guiness Corporate Advisors Pvt. Ltd. (a company of Guiness group which is facing suspension of activities for the second time in their tenure so far). Company then issued 1080000 shares at Rs. 36 per share and has since seen historical high/low of Rs.393/ Rs. 30.55 and last 52 weeks high/low of Rs. 240/ Rs. 166. Now this time it is coming out with an FPO through Aryaman Financial Services Ltd.
MIL is engaged in the manufacturing of specialized textile manufacturing machines that includes Yarn Twisting, Winding and Heat Setting. It caters to domestic as well as global markets.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plan to expand manufacturing facility at Sachin, Surat (Rs. 10.44 cr.) and working capital needs (Rs. 0.66 cr.), MIL is now coming out with a Fresh Public Offer (FPO) of 522000 equity shares of Rs. 10 each at a fixed price of Rs. 225 per share to mobilize Rs. 11.75 cr. The issue opens for subscription on 13.06.19 and will close on 18.06.19. Minimum application is to be made for 500 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. This issue is solely lead managed by Aryaman Financial Services Ltd. while Karvy Fintech Pvt. Ltd. Aryaman Capital Markets Ltd. will be the market maker for this issue. Issue constitutes 11.73% of the post issue paid up capital of the company. MIL is spending Rs. 0.65 crore for this issue process.
Having issued initial equity at par, MIL raised further equity in the price range of Rs. 36 to Rs. 100 per share between August 2009 and May 2017. It has also issued bonus shares in the ratio of 3 for 2 in January 2017. The average cost of acquisition of shares by the promoters is Rs. 4.00 and 4.77 per share. Post issue, MIL's current paid up equity capital of Rs. 3.93 crore will stand enhanced to Rs. 4.45 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, on a consolidated basis, MIL has posted turnover/net profits of Rs. 21.94 cr. / Rs. 2.41 cr. (FY18) and Rs.36.42 Cr. / Rs. 4.95 cr. (FY19). On a standalone basis, MIL has posted turnover/net profits of Rs.13.49 Cr. / Rs. 1.25 cr. (FY17), Rs. 21.57 cr. / Rs. 2.55 cr. (FY18) and Rs. 35.31 cr. / Rs. 4.52 cr. Thus it has shown growth in top and bottom lines for the past three fiscals. For the last two fiscals, on a consolidated basis, MIL has posted an average EPS of Rs. 10.50 and an average RoNW of 32.54%. The issue is priced at a P/BV of 6.05 based on its NAV of Rs. 35.52 as on 31.03.19 and at a P/BV of 3.72 on the basis of post issue NAV of Rs. 57.75. If we attribute FY19 earnings on fully diluted equity post this issue then asking price is at a P/E of around 19 plus.
Post maiden listing MIL has seen a historic high of Rs. 393 and the low of Rs. 30.55. For the last 52 week, it has posted a high/low of Rs. 240/Rs. 166. Last trades price is Rs. 208.65 (as on 07.06.19).
COMPARISION WITH LISTED PEERS:
As per offer documents, it has shown Lakshmi Machine Works, Lakshmi Automatic Looms and Stovec Industries as its listed peers that are currently trading at a P/Es of around 27, 18 and 17(as on 07.06.19). However, they are not strictly comparable with MIL.
MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's front, this is the 32nd mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened at a discount and the rest with a premium ranging from 0.02 % to 1.25 % on the day of listing. Thus it has a poor track record.
Based on its maiden IPO price, it has given attractive returns in the long term and has posted growth in top and bottom lines. However, current FPO is at a higher price than the last traded price of Rs. 208.65. To sail through this FPO, the market operation is not ruled out to lure investors. Hence cash surplus risk savvy investors may consider investment for long term at their own risk.
Review By Dilip Davda on June 8, 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 Meera Industries Limited offers an early investment opportunity in Meera Industries Limited. A stock market investor can buy Meera Industries FPO shares by applying in IPO before Meera Industries Limited shares get listed at the stock exchanges. An investor could invest in Meera Industries FPO for short term listing gain or a long term.
Read the Meera Industries FPO recommendations by the leading analyst and leading stock brokers.
Meera Industries FPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Meera Industries FPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Meera Industries FPO 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 Meera Industries FPO.
The Meera Industries FPO allotment status will be available on or around June 21, 2019. The allotted shares will be credited in demat account by June 25, 2019. Visit Meera Industries FPO allotment status to check.
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