Angel Fibers IPO Review, Subscription Status; Should you Invest?

Angel Fibers Ltd.(AFL) has come up with its maiden IPO to be listed in BSE SME, after the allotment of shares. The company has planned to raise Rs. 18.22 crore. The lead manager of Angel Fibers IPO is Guiness Corporate Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. The IPO constitutes 26.99% of the post issue paid up capital of the company.

AFL is in business of spinning of cotton yarn, and trades in its by-product i.e. cotton waste. The company manufactures 4363 Metric Tonne cotton yarn per annum with its installed capacity of 19,584 spindles. The products manufactured are bed sheets, socks, knitted fabrics, Shirting, Sheeting, Bottom Weights, etc. The company caters to domestic / international markets for selling its products.

Angel Fibers IPO subscription status on Day 2 shows the strong demand among retail investors as the issue was subscribed 0.97 times in the retail category with an overall subscription of 0.59 times.

Purpose of the issue

Angel Fibers has come up with an IPO to get the benefits of listing their equity shares on the stock exchange and for the Offer for Sale. The AFL IPO has fixed issue price of Rs 27 Per Equity Share. The company will not get any proceeds from the IPO and all the funds raised will be received by the selling shareholders.

IPO Key Dates

• Issue Open: February 20th, 2018 to February 23rd, 2018
• Issue Size: 6,748,000 Equity Shares of Rs 10 aggregating up to Rs 18.22 Cr and Offer for Sale of 6,748,000 Equity Shares of Rs 10 aggregating up to Rs 18.22 Cr
• Face Value: Rs 10 Per Equity Share
• Minimum Order Quantity: 4000 Shares and can be applied in multiples thereon, thereafter.

Should you invest in Angel Fibers IPO?

In FY 17, AFL has reported the turnover of Rs. 88.74 cr and the net profit of Rs. 3.11 cr compared to turnover of 51.02 cr and loss of Rs. 5.65 cr in FY 16. In the first half of the current fiscal, the company has reported the net profit of Rs. 2.59 cr. on a turnover of Rs. 46.08 cr.

If we annualize the latest earnings and attribute it on post issue equity then the AFL IPO is priced at a P/E of approximately 13 plus. On the other hand, its listed peers are trading at a P/E of 15 (Ginni Filament) and 45 (Nagreeka Exports).

Therefore, the IPO appears reasonably priced. Looking at response to recent IPOs and since the company caters to SME, the investors with moderate risk profile can subscribe the IPO with a long term view.