CFF Fluid Control Limited

Indong Tea Company Limited incorporated in the year 1990, owns and operates a Tea Garden under Government lease and is engaged in Tea Plantation & Manufacturing of CTC Tea at Indong Tea Estate situated at Jalpaiguri District of West Bengal. The Indong Tea Estate is spread over an area of 740.38 Hectares which comprises of Tea Plantation, Tea Factory, Withering Trough House, Officer's Bunglows, Staff Quarters, Labour Quarters, Pump House, General Stores, Dairy Farm etc. Company has employed approximately 1346 employees at various levels of the Organization including temporary labour.   As per financial performance, CFF Fluid Control Limited has posted total income/net profits of Rs 31.96 Cr / Rs 1.33 Cr (FY20), Rs 14.81 Cr / Rs 0.25 Cr (FY21), Rs 47.12 Cr / Rs 7.80 Cr (FY22) and Rs 50.85 Cr / Rs 7.18 Cr (upto 9M FY23). So company has shown good growth in top-line & bottom-line except FY21, but sudden rise in net-profit raises doubts. Company has posted an average EPS of Rs 2.94 and average RoNW of 30.71% for last three fiscals. Issue is priced at a P/B of 2.98 as per NAV of Rs 55.35/- post issue. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 41.2 and as per annualised FY23 earnings P/E is 33.56. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Aryaman Financial Services Limited associated with this SME IPO and handled 17 SME IPOs in last 3 years. From last 10 SME IPOs, 9 opened above issue price or at par and remaining below issue price on the listing day. As of now from last 10 IPOs, 4 are trading below and remaining are trading above issue price or at par. ( As on 30.05.2023 ) As per financials, CFF Fluid Control Limited has shown good results, RoNW is 52.56% and P/E is respectively 41.2 and 33.56 as per FY22 and annualised FY23 earnings, which looks very aggressively priced. Also sudden rise in net profit just before IPO raises doubts. Performance of BRLM is average post listing. So we are giving AVOID rating to this IPO.

• 1 Sunil Menon
• 2 Gautam Makkar