Affordable Robotic & Automation Limited

Started in 2010, Pune - Maharastra based, Affordable Robotic & Automation Limited is a company engaged in the business of providing turnkey automation solution to automotive, semi-automotive and manufacturing industries. The Company programs and automates the functions of machines used in manufacturing process of the automobile industry. The Assembly facility of the Company is situated at Pune, Maharashtra along with the Head office, covering an area of 8,442 sq. meters. The Company is also in the business of assembling and installing automatic multilevel car parking system. This system is preferred by residential complexes, shopping malls, and commercial buildings. It has a presence in Mumbai and Pune in automated car-parking business. Further, in FY 2017-18, the Company has set-up a new line of business, Secondary Packaging, which is aimed at FMCG industries by way of providing automation service in container packaging of the final packed product. Companies top 5 customers are Bajaj Auto Ltd, Badve Engineering Ltd, Badve Autotech Pvt Ltd, Rajshriya Automotive Industries Pvt Ltd and SKH Y Tech India Pvt Ltd. As on December 31, 2017, company has 256 employees in payroll. As per financial performance, ARAL has posted total revenue/net profits of Rs. 17.27 cr. / Rs. 0.43 cr. (FY13), Rs. 24.23 cr. / Rs. 0.81 cr. (FY14), Rs. 25.95 cr. / Rs. 0.14 cr. (FY15), Rs. 47.09 cr. / Rs. 1.22 cr. (FY16) and Rs. 41.56 cr. / Rs. 3.72 cr. (FY17). For the period upto Q3 of FY18, it has earned net profit of Rs. 3.76 cr. on a turnover of Rs. 46.75 cr. So company has shown good performance in top-line and bottom line except FY17 when there is decline in top-line. In FY17 and FY18, there is sudden jump in bottom-line. Issue is priced at a P/BV of 5.1 on the basis of its NAV of Rs. 16.67 as on 31.12.17. For last three fiscals, it has posted an average EPS of Rs. 3.85 and an average RoNW of 43.89% on equity base of 1.25 cr. If we annualise latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 17. As per RHP, there is no listed peers and as per latest earnings issue looks fully priced. On BRLM's front, for Pantomath Capital Advisors Private Limited, this is the 64th IPO since last three fiscals and out of recent 10 listings, 1 listed at par and remaining with 1% to 40% premium on the day of listing. As of now from last 10 IPOs, 6 are trading above issue price and remaining below issue price or at par. So track record of BRLM is good. As per financials, company's performance is good and consistent except FY17 when there is decline in top-line, RoNW is 43.89% for last three fiscals and issue is fully priced as per latest earnings. Company provides solution for automation, multilevel parking and automated packaging and it looks very promising in upcoming years. So, We give SUBSCRIBE rating to this SME IPO as per the current market condition.

• 1 Mr. Milind Padole
• 2 Mr. Manohar Padole