Ambition Mica Limited

Started in Ahmedabad, in the year 2010, Ambition Mica Limited is an ISI certified Company primarily engaged in manufacturing of mid segment decorative laminates and door skins. Within a short period of its existence, they have garnered significant market share in 1 MM mid segment brands. AML markets laminates under brands like Velson, Antique, Art Lam, Antique Aurum, Antique colour core and Antique Natural Wood. They also market door skin under brands like Beautique, Texas, Micro Touch, Antique Natural Wood and Door Touch. Company got listed on SME platform of BSE Ltd. through IPO on July 14, 2015 and trading around Rs 48 on 16-11-17 and its coming again with FPO of 30 lac shares. With approximately 1,571 designs in laminates and 452 designs in door skins, AML has very diverse design portfolio in the Industry with specialization in textured laminates. AML has a strong network of about 26 distributors and 4799 dealers, they serve both industrial and consumer industry and have been able to establish a presence in west and south India. Company is engaged in manufacturing following products:Decorative Laminates: Decorative Laminates are laminated products primarily used as furniture surface materials or wall paneling. They are usually used for furniture tops especially on flat surfaces, including cabinets and tables.Door Skin: Door skin is a cost effective alternative for artistically covering the doors while minimizing wastage. It is primarily a laminate which comes in standard door sizes and vide variety of designs which can be easily used to cover doorsColor Core Laminate: Color Core Laminates, with its solid color throughout are ideal for use in high visibility areas like sales counters, reception desks and furniture and offer enormous possibilities for innovative and trendy interiors.Electrical Insulation Board: Electrical Insulation Board is basically laminate sheet which is used for manufacture of switch boards. On performance front, AML has reported total revenue/net profits of Rs. 20.48 cr. / Rs. 0.83 cr. (FY13), Rs. 35.57 cr. / Rs. 0.91 cr. (FY14), Rs. 38.18 cr. / Rs. 1.73 cr. (FY15), Rs. 49.31 cr. / Rs. 1.79 cr. (FY16), Rs. 51.54 cr. / Rs. 1.99 cr. (FY17). Upto 31.09.17 of current fiscal, it has posted net profit of Rs. 0.84 cr. on total revenue of Rs. 33.63 cr. It has reported an average EPS of Rs. 1.62 and average RoNW of 16.15% for last three fiscals. Issue is priced at a P/BV of 3.1. Company's top-line is growing consistently and but bottom line not showing same growth and its due to thin margins as market is highly competitive. If we annualize latest earnings and attribute it on post issue paid up capital, then asking price is at a P/E of around 37 plus against industry average P/E 29. Thus issue appears to be aggressively priced. On merchant banker's front, this is 54th mandate from Pantomath so far and last 10 listings have given rewards ranging from 0.002% to 20% on debut day in openings. This is the 3rd mandate from SIDBI so far and last two listings have rewarded with around 13% on debut day in openings. As per financials, company's growth is good, RoNW is 16.15% for last three fiscals and issue is aggressively priced as per latest earnings. With growth  in top line, bottom line is not showing same growth due low margins and margins may not increase in near future also as market is highly competitive in this segment. Company is working in decorative laminates segment and after demonetization and implementation of GST organized player are big beneficiaries, so we give SUBSCRIBE rating to this SME IPO.

• 1 Veljibhai Patel
• 2 Govindbhai Patel