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IPO Watch: SME IPO Closing this week, Should you Invest?

IPO Watch: SME IPO Closing this week, Should you Invest?

After the spate of demonetization and GST, the banking credit has been squeezed hence, MSME financing is taking the aid of IPO to expand their business and to address their working capital demands. Here, in this article we present 3 BSE/NSE SME IPO  and is it worth to invest in them.

Small businesses (SME) are known to be driver of growth and job creation across many countries.  While the large conglomerates get struck in the global volatility pressure, it is the small business that turn out to be a dominant engine. In the upcoming budget it is believed that a lot of opportunities will be presented by Narendra Modi to bring massive change in the business environment.

NSE SME IPO

A and M Jumbo Bags IPO

Started its venture in the year 2011, A and M Jumbo Bags is an Ahmedabad based company engaged in manufacturing and supply of jumbo bags and flexible intermediate bulk container used by different companies including pharmaceuticals, chemicals, fertilizer, cement, and mineral companies.

The main promoters of the company are Mr. Pratish Shah (holding number of 4, 82,930 shares) having an average acquisition cost of Rs 10.03 and Gita Patel (2,27, 250 shares) holding average acquisition cost of Rs 9.90.

The company intends to utilize its proceeds towards meeting working capital requirements and to meet general corporate purposes.

Financial Details

A and M Jumbo Bags’ financial performance (in INR lakh)
FY2013 FY2014 FY2015 FY2016 FY2017 5M FY2018
Total revenue 170.7 385.5 438.9 452.6 523.9 221.6
Total expenses 170.4 385.1 438.8 454.5 488.6 188.9
Profit after tax 0.2 0.3 -0.1 -1.8 24.4 22.6
Company Name Face Value EPS PE Ratio Ro NW NAV
A and M Jumbo Bags 10 6.53 9.95 61.37% 10.65%

BSE SME IPO 

Gujarat Hy Spin Limited IPO

Started its venture in 2011, Gujarat Hy-Spin Limited is a Rajkot based manufacturing company engaged in offering cotton yarns to the public. Once the trader of cotton bales and cotton seeds, the company started manufacturing cotton yarns to cater the overwhelming demand of domestic market as well as internationally. Today, it has grown strength-by-strength and further sells its products to industrial units for weaving and other purposes.

The promoters of the company include Maganlal Parvadiya and Chandulal Parvadia, aggregately holding 92,30,660 equity shares, thus representing 55.11% of pre-offer paid up capital.

The company wants to launch its IPO in the market to avail the listing benefits on the stock exchanges.  It is offering 44,50,0000 equity shares by the selling shareholders.

Financial Details

The company has booked Rs 51.89 crore of profit in the year 2016 and Rs 52.04 crore in 2017 and the company has remained in loss position for two consecutive years 2014 and 2015.

EPS 0.09
Price to Earnings Ratio 114.42
Return on Net Worth 0.81%
Net Asset Value 10.77

Medico Remedies IPO

Medico Remedies is a pharmaceutical company that manufactures drugs, antacids, vitamins and other health supplements. Further, in addition, the company specializes in manufacturing diabetes, cardio-vascular drugs, diuretics, cream, gel and other medicines. Its clients include Indian as well as offshore clients like Anphar Limited, Saad Medical, Manfes Pharmaceuticals and Chemical Industries, Directorate of Health Services, to name a few.

The promoters of the company are Haresh Mehta, Harshit Mehta and Rita Mehta.

The objectives of the issue are to repay its existing loans and funding expenditure for the corporate purposes.

Financial Details

Face Value 10
EPS 5.09
PE Ratio 19.64
RONW 9.94%
NAV 51.16

Rs (in Crores)

Key Dates for SME IPO

A and M Jumbo Bags IPO Gujarat Hy Spin Limited  Medico Remedies IPO
 Issue Open  Jan 29, 2018 – Feb 2, 2018 Jan 25, 2018 – Jan 31, 2018 Jan 29, 2018 – Jan 31, 2018
 Issue Size  616,000 Equity Shares of Rs 10 aggregating up to Rs 4.00 Cr 4,450,000 Equity Shares of Rs 10 aggregating up to Rs 4.45 Cr 1,099,200 Equity Shares of Rs 10 aggregating up to Rs 10.99 Cr 
 Face Value  Rs 10 Per Equity Share Rs 10 Per Equity Share Rs 10 Per Equity Share 
 Issue Price  Rs 65 Per Equity Share Rs 10 Per Equity Share Rs 100 Per Equity Share 
 Market Lot  2000 Shares 10000 Shares 1200 Shares 
 Minimum Order Quantity  2000 Shares 10000 Shares 1200 Shares 
Listing At  NSE SME BSE SME BSE SME

Where Should you invest?

While the IPO market is growing by leaps and bounds for the SME segment and investors are benefiting from it, but we recommend you to invest in A and M Jumbo Bags IPO  if you can hold the investments for long term and if you have excess cash.

Gujarat Hy Spin Limited IPO is not that attractive unless you want to place bet on a penny stock in your kitty. Going by the financials till the financial year 2015 the company has shown steady growth in profits, but in FY 2016, it has shown sharp decline in the profits.

Medico Remedies IPO’s only drawback is the high price of Rs 100 per equity share, which seems to be on higher side. Here, we will give a neutral on this new issue. We feel that the long term investors can apply for this IPO. Though company financials reveal that the company has managed to grow steadily year on year. The main reason for the investor will be steady profit graph.

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