Narmada Agrobase Ltd. (NAL) IPO Review, Should You Invest?

Narmada Agrobase ltd.(NAL) has come with an initial public offerings (IPO) of 2,340,000 equity shares of Rs. 10 aggregating up to Rs.7.46 Cr. on 28^th March, 2018. The price band of Narmada Agrobase IPO is Rs. 32 per equity share. NAL IPO will be listed at NSE under SME emerge platform.

Narmada Agrobase Ltd. business profile

Narmada Agrobase Ltd. is a Gujarat based company, incorporated in year 2013. The company is engaged in the business of manufacturing and processing of cattle feed, cottonseed meal cake, soya bean meal, Guar meal etc.

The products of the company are used for the feeding of cattle which provides large amount of proteins and other nutrients to them.

Narmada Agrobase manufactures and exports its products under brand name of “Churma” and “Gaay Chaap Narmada Pashu Aahar”.

Key dates of Narmada Agrobase IPO

• Issue closing date: 11^THApril, 2018
• Issue constitutes: 31.09%
• Market lot- 4000 shares

Purpose of Narmada Agrobase IPO

The objective of the issue of IPO is:

• To meet working capital requirement- Rs. 6.00 crores
• General corporate expenses- Rs.1.18 crores
• Issue related expenses-Rs. 0.30 crores

Valuation parameter

On financial front of Narmada Agrobase ltd., from FY 2014 to FY 2017, we can see revenue/net profit for FY 2014 is Rs. 2.09 cr. / Rs. (0.024), for FY 2015 Rs. 22.03 cr. / Rs. 0.14 cr., for FY2016 Rs. Rs. 30.70 cr. / Rs. 0.19 cr., for FY 2017 Rs. 34.44 cr. / Rs. 0.30 cr. and for first nine month of current fiscal year revenue is Rs.17.40 cr. and net profit is Rs. 0.21 cr.

We will get P/E of around 57, after annualizing latest earnings and attributing it to fully diluted equity post issue.

As per document, Narmada Agrobase has no listed peer to compare with.

The company has posted an average EPS of Rs. 0.78 for last three fiscals.

Should you invest in NAL IPO?

Listing gain/loss of some of the recent IPO are- Tasty dairy specialties ltd. was 3.89%, Hindustan Aeronautics ltd was -8.46%, Hindcon chemicals ltd. was -5.71%.

Narmada Agrobase Ltd. belongs to agriculture sector. And in India, this sector has performed very well in recent time. So, the stocks which belong to this sector also performed well.

But, As far as Narmada Agrobase IPO is concerned, I would recommend investors to stay away from this NSE SME IPO because of its unreasonable price offer. You can check the subscription status of the issue on NSE Emerge.