An Export IPO: Initial Public Offering (IPO) of an export There is a good response from retail investors on March 30, the last day of bidding. Agricultural produce and commodity traders want to raise Rs 60 crore through this issue. The price band for the offer that closes on March 30 is Rs 65-68 per share. Established in 1988, Uma Exports is engaged in trading and marketing of agricultural products and commodities from Canada, Australia and Myanmar to India. It has expanded its business to Malaysia, UAE, Sri Lanka and Bangladesh. It works in sugar, spices such as dried red pepper, turmeric, coriander, cumin, rice, wheat, corn, sorghum, and cereals such as tea, lentils, and agricultural feeds such as soybean meal and rice bran oil-free cakes.
Uma Exports IPO: Price Band
The company is selling its shares in the range of Rs 65-68 through initial stake sale and the issue consists entirely of issue of fresh equity shares with a face value of Rs 10. The company’s shares will be listed on both BSE and NSE, while investors can bid for the issue till Wednesday, March 30. Investors can bid for at least 220 equity shares.
Uma Exports IPO: Subscription Status
The offer has received bids for 3.84 crore equity shares against the IPO size of 92.3 lakh shares, the issue has been subscribed 4.17 times. Retail investors have subscribed 5.62 times of the allotted quota, while the portion set aside for non-institutional investors was 94 per cent and fully booked for eligible institutional investors.
Uma Exports IPO: GMP
Shares of Uma Exports are yet to make their gray market debut. Hence, the IPO of Uma Exports is not available on the second day of GMP (Grey Market Premium) bidding.
Uma Exports IPO: Financials
Despite the name of the company indicating an export company, in FY20-21, Uma Exports’ business of import of agricultural commodities and sales in the domestic market accounted for around 93 per cent of the total revenue. In the first half of FY12, business from exports accounted for 15.7 per cent of revenue.
Choice Broking said the company has registered a small but strong financial performance in FY 19-21, which is characterized by business growth along with stability in profitability margins. It registered a growth of 51.1 per cent CAGR in consolidated revenue at Rs 750.7 crore in FY 2011, mainly due to higher sales volume in FY 2019-21.
Gross margin declined from 14.7 per cent in FY19 to 10.3 per cent in FY21. However, Choice Broking said EBITDA margin averaged 2.5 per cent over FY19-21, mainly due to lower employee cost and other expenses. Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) grew at a CAGR of 52.7 per cent to Rs 19.9 crore in FY2011.
Uma Exports IPO: Valuation
The company has a market capitalization of Rs 230 crore at the higher level of the price band.
“At the higher price band of Rs 68, Uma Exports is seeking a P/E (price-to-earnings) multiplier of 18.9x (for its TTM earnings of Rs 3.6) at a discount to its listed counterparties only. . Given the low trading margin, the company’s business does not appear sustainable. Thus we are assigning ‘Avoid’ rating to the issue,” Choice Broking said.
Uma Exports IPO: Should You Subscribe?
Hem Securities in its IPO report said that Uma Exports is positioning the issue on a pre-issue FY21 EPS basis at a P/E multiple of 14x. The company, which is into trading and marketing of agricultural produce and commodities, has debt on books.
“Although the company’s other ratios such as margin and return on shareholder’s funds are better than its peers, given the business profile and debt position, we recommend ‘avoiding’ this issue,” it added.
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