Incorporated in 1987, Anand Rayons Limited was an idea of Mr Gokul Bakshi. It is engaged in trading of yarn and value-added yarns including polyester filament yarns, nylon yarns, fancy yarns and dope dyed yarns. Initially, the company had only one dealer for the polyester yarn that is Reliance Industries Limited to trade in and around Surat, Gujarat. Now, the company has also extended dealership network with JCT Limited for Nylon Yarn, and Indorama Synthetics India Limited, Filatex India Limited and Garden Silk Mills Limited for Polyester Yarn. The yarns traded by the company has wide application in the weaving of sarees, yarn dyeing, Elastic tapes, carpets, and dress & shirting materials. . As the company is trading in and around Surat only, it is planning to expand yarn trading business in other states such as Maharashtra, Delhi, Karnataka and Uttar Pradesh as well. The R&D team of the company is also working on twisted yarn, Sheath- Core yarn, Bi-Shrinkage yarn for GEO-textiles to expand the business. The competitive strengths of the company are: 1. Specialization in trading of yarns and value-added yarns.2. Strong dealership with Reliance Industries Ltd for 31+ years.3. A sound relationship with spinners & customers. On the financial performance front, Anand Rayons has posted turnover/net profits of Rs. 219.92 cr. / Rs. 0.45 cr. (FY16), Rs. 270.62 cr. / Rs. 1.04 cr. (FY17) and Rs. 259.59 cr. / Rs. 1.45 cr. (FY18). For upto 31.01.2019 (FY19) it has earned net profit of Rs. 1.72 cr. on turnover of Rs. 231.76 cr. So company has shown healthy growth over the years. Trade receivables for company in FY18 is around Rs 54.71 cr which is around 21% of total income. Promoter and promoter group taking salary of around 42 lakhs per annum. Also top-line is in decreasing mode since FY17, but than also company has shown increase in profit. Anand Rayons has posted an average EPS of Rs.1.67 and an average RoNW of 16.65% for last three fiscals. The issue is priced at a P/BV of 1.61 on the basis of its NAV of Rs. 16.77 post issue. If we annualise latest earnings of FY19 and attribute it on fully diluted post issue equity, then asking price is at P/E of 19.56 and for FY18 P/E is 28.12, thus issue appears fully priced. As per RHP, listed peers are shown in above table, but it can't be strictly comparable. On BRLM's front, for Guiness Corporate Advisors Pvt Ltd this is the 29th IPO in last three fiscals and from last 10 IPOs, one opened below issue price and remaining opened above issue price with 1% to 20% premium on the day of listing. As of now, from last 10 IPOs, seven is trading below issue price and remaining above issue price. ( As on 13.06.19 ) Financial results of company are average, RoNW is 16.65% and issue looks fully priced with respect to latest earnings with P/E of 19.56. Performance of BRLM is good on the day of listing, but after listing most of the companies are trading well below issue price. So we give AVOID rating to this SME IPO.
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