Aristo Bio-Tech And Lifescience Limited

Aristo Bio-tech And Lifescience Limited is an agrochemical company engaged in the manufacturing, formulation, supplying, packaging and job work services in various Pesticides such as Insecticides, Herbicides, Fungicides, Plant Growth Regulators and a wide variety of other Agrochemicals for India as well as for Export. Agrochemical industries are very vast field and deals with production and distribution of pesticides and fertilizers to increase the crop yields. Agrochemicals (Crop protection products/pesticides) are designed to protect crops from insects, diseases and weeds. Currently company has 182 products registered with CIB&RC for manufacturing and sales.  Company supplies its products across 20 states i.e. Assam, Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Haryana, Jammu & Kashmir, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttarakhand, Uttar Pradesh, West Bengal and 15 Countries i.e. Armenia, Australia, Bangladesh, Belgium, Cambodia, Germany, Italy, Kenya, Moldova, New Zealand, Poland, South Africa, UAE, Ukraine and Vietnam. Company's production unit is situated at E-24, 25, 26 G.I.D.C Estate, Manjusar, Taluka Savli, Vadodara, Gujarat - 391775, India.  As on September 30, 2022 the Company has 55 employees on payroll. As per financial performance, Aristo Bio-Tech And Lifescience Limited has posted total income/net profits of Rs 201.24 Cr / Rs 1.01 Cr (FY20), Rs 167.23 Cr / Rs 1.07 Cr (FY21), Rs 166.03 Cr / Rs 1.46 Cr (FY22) and Rs 129.07 Cr / Rs 2.59 Cr (6M FY23). So company has shown zig-zag revenue, but jump in net profit just before IPO is very surprising. Company has posted an average EPS of Rs 2.52 and average RoNW of 9.05% for last three fiscals. Issue is priced at a P/B of 1.67 as per NAV of Rs 43.01/- post issue. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 33.55 and as per annualised FY23 earnings P/E is 9.47. Comparison between listed peers is shown in above table. On BRLM's front, Beeline Capital Advisors Private Limited associated with this SME IPO and handled 6 SME IPOs in last 3 years. From last 6 IPO all opened above issue price or at par. As of now from last 6 IPOs, two are trading below and remaining are trading above issue price or at par. ( As on 10.01.23 ) As per financials, Aristo Bio-Tech And Lifescience Limited has shown zig-zag results, RoNW is 10.00% and P/E is respectively 33.55 and 9.47 as per FY22 and annualised FY23 earnings, which looks aggressively priced. Increase in net profit just before IPO raises doubts. Also company is in agrochemical business which is highly fragmented and competitive, but also good growth opportunity. Performance of BRLM is good. Also we may find better listed peers at cheaper valuations. So we are giving AVOID rating to this SME IPO.

• 1 Mr. Narendra Singh Barhat
• 2 Mrs. Kusum Narendra Singh Barhat
• 3 Mr. Ketankumar Harkantbhai Joshi