Artedz Fabs Limited

Incorporated in 2006, Mumbai based Artedz Fabs Limited is engaged in trading and manufacturing of cotton yarn dyed fabrics for suiting and shirting. With in-house designing team and expertise in grey fabrics, they receive the orders from Indian and international markets as well. It has a major manufacturing unit installed at Bhiwandi, Maharashtra, with a capacity of 21 Lakhs Sq. metre fabrics per annum. The popular products of the company are cotton fabric, linen fabric, polyester fabric, nylon fabric and blended fabric. Company follow Just-in-time concept for managing its inventory level and cost which means they manufacture its products on the basis of orders received from the customers. The company is specialised in manufacturing men's clothing for summer and winter. Artedz is planning to expand the operations in women wear as well. The company sell its products to the traders engaged in the textile industry.They further sell the fabric to the units engaged in the manufacturing of apparels Following strengths have contributed to the company's success and will continue to be competitive: • On-Time Delivery • Experienced team and promoters • Unique in-house design • Long-maintained customer relations On the financial performance front, Artedz has posted turnover/net profits of Rs. 38.77 cr. / Rs. 0.35 cr. (FY16), Rs. Rs. 53.10  cr. / Rs. 1.78 cr. (FY17), Rs. 64.33 cr. / Rs. 3.51 cr. (FY18).  For the H1 of FY19, it has earned a net profit of Rs. 2.54 cr. on a turnover of Rs. 36.63 cr. So company has shown healthy growth all these years. Trade receivables for FY18 was 33.70 cr, which is above 50% of total revenue that's not good for any business. For last three fiscals, Artedz Fabs has posted an average EPS of Rs. 3.67 and an average RoNW of 31.68%. The issue is priced at a P/BV of 2.07 on the basis of its NAV of Rs. 17.35 as on 30.09.18. If we annualise latest earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 6.06 thus issue appears very reasonably priced and if we take FY18 earnings, then P/E is around 8.76. Comparison with listed peers is given in above table.  On BRLM's front, for Pantomath Capital Advisors Private Limited this is the 78th IPO in last three fiscals and from last 10 IPOs, all opened above issue price with 1% to 10% premium on the day of listing. As of now, from last 10 IPOs, 3 are trading below issue price and remaining above issue price. ( As on 15.03.19 ) Company has shown good growth, RoNW is 31.68% and issue looks very reasonably priced with respect to current earnings and as well as FY18 earnings.  Higher trade receivables is big concern. Company is planning to expand for woman wear fabric also. Performance of BRLM is good. So we give SUBSCRIBE rating to this SME IPO.

• 1 Mr Kashyap Gandhi
• 2 Mr Satbinder Singh Gill