Started in 2011, A and M Jumbo Bags Limited is Ahmadabad-based company engaged in manufacturing and supply of Polyethylene Jumbo Bags and Flexible Intermediate Bulk Container (FIBC) used in industrial and commercial packaging units. These bags are used in packing of various materials such as chemicals, fertilisers, pharmaceuticals, polymers, cement, minerals, food grains, human consumption items, etc. FIBC's are widely used for bulk transportation of industrial raw material, semi finished and finished product. These bags are giant size bags in drum or box shape and are internationally used as bulk bags or big sized bags or Flexible Intermediate Bulk Containers. These bags are made out of PP UV stabilised nylon or polypropylene or HDPE fabric with four corner loops for easy handling. Top and bottom spouts are provided for easy filling and discharge of material. There is also a provision for controlled discharge of the material at required rates. The manufacturing unit of the Company is located at Jabalpur, Ahmadabad. Company has installed facility to manufacture 2,00,000 Pieces. In year 2017-18 company produced around 1,25,744 bags. On financial performance front, AnM has posted turnover/net profits of Rs. 1.71 cr. / Rs. 0.002 cr. (FY13), Rs. 3.86 cr. / Rs. 0.003 cr. (FY14), Rs. 4.39 cr. / Rs. -(0.001) cr. (FY15), Rs. 4.53 cr. / Rs. - (0.02) cr. (FY16), Rs. 5.24 cr. / Rs. 0.14 cr. (FY17). For first five months of the current fiscal, it has reported net profit of Rs. 0.13 cr. on a turnover of Rs. 2.22 cr. It is surprising that Company has preferred to give just first five months performance instead of first half. For last three fiscals, AnM has posted an average EPS of Rs. 3.10 and an average RoNW of 26.74% based on a paid up equity capital of Rs. 0.17 crore only. Asking price is at a P/BV of around 3.89 based on its NAV of Rs. 16.69 as on 31.08.17 and at a P/BV of around 2.84 on the basis of its post issue NAV of Rs. 22.85. If we annualise latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 21 plus making it fully priced. Listed peers are trading in the range of 1 to 31 P/E as per DRHP. Lowest P/E of 1.04 is of Shree Tirupati Balajee FIBC (having a turnover of Rs. 70 crore) and the highest P/E of 31.49 is of Emmbi Ind (having a turnover of Rs. 241 crore). On merchant banker's front, this is the 58th mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened around par and the rest with premiums ranging from 1% to 130% on the day of listing. 130% rewards are from the only main board IPO of this merchant banker i.e. Astron Paper. As per financials, company's growth is consistent, RoNW is 26.74% for last three fiscals and issue looks completely priced as per latest earnings. Company is in packaging industry and with growth of other sectors, this industry will also grow, but its very competitive segment. So, we give NEUTRAL rating to this SME IPO.
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