Established in 2010, Aztec Fluids & Machinery Limited provides coding and marking solutions to a diverse range of industries such as personal care, food & beverages, pharmaceuticals, construction materials, cables, wires & pipes, metals, automotive & electronics, agrochemicals, chemicals & petrochemicals etc. Our product portfolio includes (i) printers such as continuous inkjet printers (CIJ), Thermal Transfer Over printers (TTO), Drop on demand printers (DOD), NIJ printers (i.e. piezoelectric printers) and laser printers (ii) printer inks and (iii) printer consumable items i.e. makeup and cleaning solvents. The range of products allows the customers to print vital variable information like batch number, date, price, logo, brand, size, barcodes, promotional codes, meter marks, special marks etc. on the products such as steel tubes, aluminum panels, G.I. sheets, laminates, glass, PVC, plywood, woven sac, corrugated boxes, plastics and packing materials. With the registered office in Ahmedabad, they own a warehouse at Survey 252, Kanera, Kheda, Gujarat, primarily for storing imported printers. To support the growth initiatives, they've recently acquired a substantial land parcel covering two plots at Survey No. 331 and 333 in Kanera, Kheda, Gujarat, measuring a total area of 7,689 square meters. These plots are strategically located in close proximity to the existing warehouse. The building construction work, encompassing the ground and first floor, has been completed at Survey No. 333. This newly constructed space will be dedicated to printer assembling, configuring, testing, and other relevant activities associated with printer. Currently, the printer testing and repairing operations are conducted at Maninagar and Vatva, both located in Ahmedabad, Gujarat. The company executed a term sheet, dated November 6th, 2023, pertaining to the acquisition of all the equity shares of Jet Inks Private Limited ('Jet Inks'), which is a Chennai based company, engaged in the business of manufacturing of inks and also deals in printers, consumables and spares. Pursuant to the term sheet, the Company acquired 18.05% stake in Jet Inks at a consideration of Rs. 3 crores. Further, the Company has entered into Share Purchase Agreement dated April 22, 2024 with Jet Inks and its existing shareholders in relation to purchase of 38,92,858 equity shares of Jet Inks Private Limited (i.e. remaining 81.95% of the equity shares) for a consideration of Rs. 14 crores, payable before May 31, 2024. Upon payment of consideration and on satisfaction of conditions stipulated in the Share Purchase Agreement, they shall acquire 100% control of Jet Inks Private Limited, pursuant to which Jet Inks shall became the Wholly-owned Subsidiary Company. As per financial performance, Aztec Fluids & Machinery Limited has posted total income / net profits of Rs 34.67 Cr / Rs 2.46 Cr (FY21), Rs 46.42 Cr / Rs 3.11 Cr (FY22), Rs 54.52 Cr / Rs 3.27 Cr (FY23) and Rs 51.82 Cr / Rs 4.50 Cr (upto Q3 FY24). So as per previous financials data, company has shown good growth. Company has posted an average EPS of Rs 3.08 and average RoNW of 23.32% for last three fiscals. Issue is priced at a P/BV of 3.37 as per NAV of 19.86 as on 31.12.23. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 29.28, 27.83 and 15.16 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Hem Securities Limited is associated with this SME IPO and handled 38 SME IPOs in last 3 year. From last 10 SME IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing. As of now from last 10 SME IPOs, one is trading below issue price and remaining are trading above issue price. ( As on 07.05.24 ) As per financials, Aztec Fluids & Machinery Limited has shown good results, RoNW is 21.32% and P/E is respectively 29.28, 27.83 and 15.16 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced and sudden rise in net-profit is very surprising. Company is in business coding and marking solutions to a diverse range of industries, which is highly competitive and fragmented business segment. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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