Amiable Logi. NSE SME IPO review (May apply)
• ALIL is engaged in providing services to importers and exporters for clearing and forwarding.
• The company has posted an average financial performance.
• Based on the FY23 annualized earnings, the issue is fully priced.
• Cash surplus/risk seekers may consider investing in this issue.
Amiable Logistics (India) Ltd. (ALIL) is in the business of providing services to importers and exporters for the smooth clearance of all kinds of imports and exports by air and sea as a clearing and forwarding agent and customs house broker. Its services also include import-export consultancy, international freight forwarding, recovery of all types of claims including customs & insurance, warehousing, and transportation through air, road, and sea.
ALIL is a Member of “The Brihanmumbai Custom House Agent’s Association” popularly known as BCHAA or BCBA. BCBA is an Association of Custom house brokers, licensed by the Commissioner of Customs, Mumbai, under the provisions of the Customs Act 1962. As of September 30, 2022, the company has around 39 employees on its payroll.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its needs of funds for working capital (Rs. 2.85 cr.), and general corporate purpose (Rs. 1.00 cr.), ALIL is coming out with a maiden IPO of 539200 equity shares of Rs. 10 each at a fixed price of Rs. 81 per share to mobilize Rs. 4.37 cr. The issue opens for subscription on November 02, 2022, and will close on November 07, 2022. A minimum application is to be made for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 30.84% of the post-issue paid-up capital of the company. ALIL is spending Rs. 0.52 cr. for this IPO process.
The sole lead manager to this issue is Shreni Shares Pvt. Ltd., and Bigshare Services Pvt. Ltd. is the registrar to the issue. Shreni Shares Pvt. Ltd. is also the market maker for this company.
The company has issued entire initial equity shares at par and has also issued bonus shares in the ratio of 4 for 1 in November 2021, and in the ratio of 1 for 5 in March 2022. The average cost of acquisition of shares by the promoters is Rs. 0.58 per share. A small equity base for IPO indicates longer gestation for migration to the mainboard.
Post-IPO, ALIL’s current paid-up equity capital of Rs. 1.21 cr. will stand enhanced to Rs. 1.75 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 14.16 cr.
On the financial performance front, for the last three fiscals, ALIL has posted a turnover/net profit of Rs. 16.13 cr. / Rs. 0.21 cr. (FY20), Rs. 14.04 cr. / Rs. 0.30 cr. (FY21), and Rs. 17.26 cr. / Rs. 0.48 cr. (FY 22). For the first half of FY23 ended on September 30, 2022, it earned a net profit of Rs. 0.65 cr. on a turnover of Rs. 13.64 cr. Thus it has posted growth in its top and bottom lines for the reported periods except for the pandemic period of FY21.
For the last three fiscals, the company has reported an average EPS of Rs. 3.11 and an average RoNW of 25.43%. The issue is priced at a P/BV of 4.07 based on its NAV of Rs. 19.90 as of September 30, 2022. The offer document is missing the data of post-IPO NAV.
If we annualize FY23 earnings and attribute it to post-IPO fully diluted equity capital, then the asking price is at a P/E of 10.90.
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, ALIL has shown Timescan Logi., Tiger Logi., Ritco Logi., Allcargo Logi., and Shree Vasu Logi., as their listed peers. They are currently trading at a P/E of 10.87, 7.85, 22.67, 62.77, and 43.46 (as of October 28, 2022). However, they are not truly comparable on an apple-to-apple basis.
MERCHANT BANKER’S TRACK RECORD:
This is the 15th mandate from Shreni Shares in the last three fiscals (including the ongoing one). Out of the last 10 listings, all opened at premiums ranging from 0.55% to 101.18% on the day of listing.
Conclusion / Investment Strategy
The company is operating in a highly competitive and fragmented segment. It has posted an average performance so far. Based on its financial data, the issue is fully priced. Tiny equity base post listing indicates longer gestation for migration to the mainboard. Risk seeker/cash surplus investors may consider a moderate investment with a long-term perspective.
Review By Dilip Davda on Oct 29, 2022
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. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. 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 own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.
(SEBI registered Research Analyst-Mumbai).
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.