AKG Exim Limited

Started in 2005, AKG Exim Limited is Delhi based diversified merchant trading company in vast range of products & commodities. Company is a merchandiser, distributor of variety of products including Non Basmati Rice, Metal Scrap, Aluminium scrap, Iron Scrap, Spices and Dry Fruits, etc. Company connects the seller and the markets, while ensuring lasting prosperity and sustainable supply at both ends. Company is catering to a large number of customers with concentration on Indian and overseas subcontinent. With a steady expansion in the market, company is consistently aiming to achieve its mission of providing world class customer services. AKG Exim imports Metal Scrap from Singapore and sells in Indian Domestic markets; and purchases Non Basmati Rice in the Indian domestic Market and exports in Signapore.  Company has two warehouses1. Khasra No. 25/20, Situated in the area of Village Shahabad Daulatpur, Delhi-110042 where only Metal scrap, Structural Steel, aluminium, Iron and their related items are stored, sorted.2. Lower Ground Floor G-1149, DSIIDC Narela, New Delhi – 110040. Currently, this warehouse is not in operation. As on July 31, 2018, company had 18 full time employees on payrol. As per the financial performance, AKG Exim has posted turnover/net profits of Rs. 70.45 cr. / Rs. 0.54 cr. (FY14), Rs. 74.82 cr. / Rs. 0.41 cr. (FY15), Rs. 98.59 cr. / Rs. 0.41 cr. (FY16), Rs. 105.55 cr. / Rs. 0.49 cr. (FY17) and Rs. 112.35 cr. / Rs. 1.02 cr. (FY18). Thus it has posted gradual growth in top and bottom lines, but in FY18 there is sudden increase in bottom-line which raises concerns. Issue is priced at a P/BV of 1.19 on the basis of its NAV of Rs. 26.04 post issue. For last three fiscals, it has posted an average EPS of Rs. 2.70 and an average RoNW of 6.34%. If we take into account latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 20 against industry composite of 164 as per RHP. On BRLM's front, for Navigant Corporate Advisors Ltd, this is the 15th IPO and from last 10 IPOs, 1 listed at below issue price, 3 at par and remaining with 2% to 20% premium on the day of listing. As of now, from recent 10 IPOs, 4 are trading below issue price and remaining above issue price. ( As on 04.09.18 ) As per financials, company's performance is consistent, RoNw is 6.34% for last three fiscal and issue is fully priced as per latest earnings. Group company of AKG is also in same business of export / import which raises concerns and sustainability of FY18 earnings also a big questions. Performance of BRLM is average. So we give AVOID rating to this SME IPO as per current market situation.

• 1 Mr. Rajeev Goel