Started in 2004, A-1 Acid Limited is Ahmedabad - Gujarat based company, engaged in the business of trading of high quality industrial acid and Chemicals. Company offers a wide range of chemical products which finds variety of applications in the industrial sector like chemical, textile, steel and aluminium, pesticides, fertilisers, intermediates, defence, metals and petro refineries. They also provide transportation facilities to the customers through their owned fleet of tankers. A-1 Acid has two godowns/warehouses both are located at Gujarat and one branch office located at Rajasthan. The products are marketed and sold in the states of Punjab, Gujarat, Maharashtra, Telangana, Jharkhand, Haryana, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Andhra Pradesh, WestBengal and Uttar Pradesh. The products are procured from the suppliers including companies like Gujarat State Fertilizers and Chemicals Limited (GSFC), Gujarat Narmada Valley Fertilizers Company Limited (GNFC), Hindalco Industries. Company has entered into the agreement/understanding with Gujarat State Fertilizers & Chemicals Limited for selling Sulphuric Acid, with Hindalco Industries Limited and Gujarat Narmada Valley Fertilizers Company Limited as an authorised dealer. Company employs both skilled and semi-skilled workers. Currently the Company has one Managing Director and seven employees and thirty labours casual and temporary in nature. As per financial performance, A-1 Acid has posted total income/net profits of Rs. 101.14 cr. / Rs. - (0.12) cr. (FY14), Rs. 97.01 cr. / Rs. 0.12 cr. (FY15), Rs. 85.39 cr. / Rs. 0.92 cr. (FY16), Rs. 105.80 cr. / Rs. 3.00 cr. (FY17) and Rs. 96.17 cr. / Rs. 2.48 cr. (FY18). So company top-line remained near to 100 Cr all these years and bottom-line has seen sharp jump in last two years. Trade receivables stands near to 25% of total revenue in FY18. Directors are taking around total renumeration of 1.14 Cr per year which is around 46% of net profit for FY18. For last three fiscals it has posted an average EPS of Rs. 3.42 and an average RoNW of 19.69%. Issue is priced at a P/BV of 1.87 on the basis of NAV of Rs. 32.08 post issue. If we consider latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 24 plus and there is no listed peers as per RHP. On BRLM's front, for Guiness Corporate Advisors Private Limited this is the 27the IPO. From last 10 IPOs, 1 opened below issue price and remaining above issue price with 0.1 to 30% premium. As of now, from last 10 IPOs, 5 are trading below issue price and remaining above issue price. ( As on 19.09.18 ) Company has almost static top-line with increase in bottom-line in last two fiscals, RoNW is 19.69% and issue looks expensive with respect to current earnings. Company is in business of trading of high quality industrial acid and Chemicals, which is very competitive and it hasn't shown any growth in top-line all these year. Performance of BRLM also not so good. So we give AVOID rating to this SME IPO.
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