A & M Febcon Ltd

Started in 2013, A & M Febcon Ltd is engaged in the services of engineering which is applied to the planning, designing and control of industrial operations and in the business of Industrial equipment and metal fabrication. Metal fabrication involves converting raw metal sheet / coil / plate into an intermediate /semi -finished products through a series of processes including cutting, bending and assembling. Industrial equipment fabrication (process equipment fabrication) is the most complex of the three - structural, commercial, & industrial - and is used primarily to develop industrial machinery. Industrial fabrication operation is mostly customized in nature. Equipments & machineries manufactured through industrial fabrication include boilers, storage tanks, heat exchangers, columns, and towers etc, collectively called as process plant equipments. These process plant equipments are widely used in petrochemical plants, oil & gas refinery, metal industry, cement plants, pulp & paper manufacturing plants etc. On performance front, for last four fiscals AMF has posted turnover/net profits of Rs. 2.95 cr. / Rs. 0.01 cr. (FY14), Rs. 5.22 cr. / Rs. 0.04 cr. (FY15), Rs. 8.27 cr. / Rs. 0.03 cr. (FY16) and Rs. 10.01 cr. / Rs. 0.45 cr. (FY17). Thus a sudden jump in bottom line is seen for the concluded fiscal. If we attribute latest earnings on fully diluted equity post issue then asking price is at a P/E of 36 plus. Issue is priced at a P/BV of 1.2 and last three fiscal’s average RoNW is 5.42%. Thus issue is highly priced and having no justification on performance parameters as well. As claimed by the management, it has no listed peers to compare with. As per financials, company's growth is only in top-line, RoNW is 5.42% for last three fiscals and issue is highly priced. There is sudden jump in bottom line in FY 17 which is thing to concern also, So we give AVOID rating to this SME IPO.

• 1 Mrs. Zalak Purveshbhai Parikh
• 2 Mrs. Renukaben Rameshbhai Shah