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Narmada Agrobase NSE SME IPO review (Avoid)

Review By Dilip Davda on March 24, 2018


Narmada Agrobase Ltd. (NAL) is an ISO 9001:2015 certified company and engaged in manufacturing & processing of cotton seed meal cake, cattle feeds and soya bean meal. The products manufactured by it are used for feeding of cattle which provides high amount of proteins and other nutrients required by them. Also the by-products of Products is used in textiles Industry, Consumer Goods Industry and Paper Industry. Company’s factory is situated at 613/P-1 IJ Pura (Jethaji) Dhanpura Road, Tal. Jotana, Mahesana - 384421, Gujarat, India.

NAL is the manufacturer and exporter of cotton seed meal, guar meal, delinted cotton seed, organic fertilizers and cattle feed under own brand name of “Churma” and “Gaay Chhaap Narmada Pashu Aahar”. Company has a flagship brand which commands a high reputation worldwide for quality products, efficient services and level of reliability as a stable supplier of quality products in cattle feed Industries. The products offered by it are processed using quality ingredients sourced from the selected vendors of the market. Before packaging and distributing, the raw material is inspected by Quality Assurance team after properly graded and processed.

To part finance its working capital and general corporate fund needs, NAL is coming out with a maiden IPO of 2340000 equity shares of Rs. 10 each at a fixed price of Rs.32 per share to mobilize Rs.7.49 crore. Issue opens for subscription on 28.03.18 and will close on 11.04.18. A long duration for this IPO raises eyebrows. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Issue constitutes 31.09% of the post issue paid up capital of the company. Issue is solely lead managed by Corporate Capitalventures Pvt. Ltd. and Karvy Computershare Pvt. Ltd. is the registrar to the issue. Post allotment, shares will be listed on NSE SME Emerge. Having issued initial equity at par, it raised further equity at a price of Rs. 32 per share. It has also issued bonus shares in the ratio of 95 for 100 in November 2017. Thus it has fully encased reserves and has empty coffins. Average cost of acquisition of shares by the promoters is Rs. 6.21 and Rs. 8.81 per share. Post issue, company’s current paid up capital of Rs. 5.19 cr. will stand enhanced to Rs. 7.53 cr.

On performance front, NAL has posted turnover/net profits of Rs. 2.10 cr. / Rs. – (0.02) cr. (FY14), Rs. 22.04 cr. / Rs. 0.14 cr. (FY15), Rs. 30.71 cr. / Rs. 0.19 cr. (FY16) and Rs. 34.45 cr. / Rs. 0.30 cr. (FY17). For the first half of current fiscal, it has earned net profit of Rs. 0.21 cr. on a turnover of Rs. 17.40 cr. Thus it has posted gradual increase in top and bottom lines. For last three fiscals, it has posted an average EPS of Rs. 0.78 and an average RoNW of 10.93%. Issue is priced at a P/BV of 4.70 on the basis of its NAV of Rs. 6.81 as on 31.03.17 and at a P/BV of 1.91 on the basis of its post issue NAV of Rs. 16.78. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 57 making it a exorbitantly priced offer. As per offer documents, it has no listed peers to compare with.

On merchant banker’s front, this is the 5th mandate from its stable. Last 4 listings opened at a premium ranging from 0.7% to 8.8% on the day of listing.


Conclusion / Investment Strategy

Considering exorbitantly priced offer, there is no harm in giving it a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on March 24, 2018

Review Author

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

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 ).

Narmada Agrobase IPO FAQs

  1. 1. Why Narmada Agrobase IPO?

    The initial public offer (IPO) of Narmada Agrobase Limited offers an early investment opportunity in Narmada Agrobase Limited. A stock market investor can buy Narmada Agrobase IPO shares by applying in IPO before Narmada Agrobase Limited shares get listed at the stock exchanges. An investor could invest in Narmada Agrobase IPO for short term listing gain or a long term.

  2. 2. How is Narmada Agrobase IPO?

    Read the Narmada Agrobase IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Narmada Agrobase IPO what should investors do?

    Narmada Agrobase IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Narmada Agrobase IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Narmada Agrobase IPO good?

    Our recommendation for Narmada Agrobase IPO is to avoid.

  5. 5. Is Narmada Agrobase IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Narmada Agrobase IPO.

  6. 6. When will Narmada Agrobase IPO allotment status?

    The Narmada Agrobase IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Narmada Agrobase IPO allotment status to check.

  7. 7. When will Narmada Agrobase IPO list?

    The Narmada Agrobase IPO will list on Thursday, April 19, 2018, at NSE SME.