Avon Moldplast Limited

Started in 1996, Avon Moldplast Limited is Ghaziabad - U.P. based company, engaged in manufacturing of quality plastic molded furniture under the brand name of 'AVON' since 2002. The Company has a fully functional manufacturing facility located at Ghaziabad, Uttar Pradesh. The Company’s Product Portfolio can be classified as under:1. Molded Chairs2. Molded Stools3. Molded Tables4. Molded Baby Chairs and Baby Desks The primary raw material required by the Company for manufacturing molded furniture is Polypropylene Co-polymer (PPCP). The said raw material is easily available from vendors like Reliance Industries Limited, Indian Oil Corporation, Haldia Petrochemicals Limited and from other local sources. The raw material is easily available throughout the year, however the price of the raw material is prone to fluctuations owing to the change in global crude prices. Company has production capacity of 8,00,000 and for FY17 utilisation is around 81.24%. The products manufactured by AML are supplied to the distributor network spread PAN India, from where it is sold into the retail market. Company has a long standing and established network of more than 100 distributors, who further have well established retail network which roughly works out to 10,000 direct selling agents. As per financial performance, company has posted total income/net profits of Rs. 6.07 cr. / Rs. 0.003 cr. (FY13), Rs. 6.18 cr. / Rs. 0.05 cr. (FY14), Rs. 8.04 cr. / Rs. 0.04 cr. (FY15), Rs. 9.99 cr. / Rs. 0.05 cr. (FY16) and Rs. 13.85 cr. / Rs. 0.10 cr. (FY17). For upto 31.01.18 of FY18, company has posted net profit of 0.69 cr on total revenue of 18.89 cr. So performance of company for FY18 is very surprising with sudden jump in top and bottom line. For last three fiscals, it has posted an average EPS of Rs 0.31 and an average RoNW of 2.80%. Issue is price at P/BV of 2.30 based on its NAV of 22.14 post issue. If we take latest earnings of FY18 and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 20, against industry average P/E of 28. As per offer documents it has shown Nilkamal Ltd, Supreme Industries Ltd, Prima Plastics Ltd and Wim Plast Ltd as its listed peer who are currently trading at a P/E of around 20, 33, 33 and 23 respectively  (as on 06.07.18). When we take into account FY17 earnings, than issue looks very aggressively priced. On BRLM's front, for Turnaround Corporate Advisors Private Limited this is the 1st IPO. As per financials, company's performance in last three fiscals improved greatly specifically in FY18, RoNw is 2.80% for last three fiscals and issue is fully priced as per latest earnings. But the sudden jump in top-line and bottom-line for FY18, is very surprising and it raises concerns. This is first issue from BRLM. So we give AVOID rating to this SME IPO as per current market situation.

• 1 Mr. Sushil Kumar Aggarwal
• 2 Mrs. Anita Aggarwal
• 3 Mr. Sahil Aggarwal