City Crops Agro Limited

As per financial performance, City Crops Agro Limited has posted total income/net profits of Rs 3.49 Cr / Rs 0.04 Cr (FY21), Rs 17.76 Cr / Rs 0.48 Cr (FY22) and Rs 24.62 Cr / Rs 1.17 Cr (FY23), So company has shown good growth, but sudden rise in bottom-line before IPO is very surprising. Company has posted an average EPS of Rs 8.01/- and average RoNW of 20.55% for last three fiscals. Issue is priced at a P/BV of 1.51 as per NAV of Rs 16.51/- as on post issue. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 84.26 and as per FY23 earnings P/E is 34.84. As per RHP, comparison between peers is shown in above table. On BRLM's front, Turnaround Corporate Advisors Private Limited is associated with this SME IPO and handled 1 SME IPOs in last 3 years. From last 1 IPO, all opened above issue price or at par on the listing day. As of now from last 1 IPOs, all are trading below issue price. ( As on 26.09.23 ) As per financials, City Crops Agro Limited has shown average results, RoNW is 9.80% and P/E is respectively 84.26 and 34.84 as per FY22 and FY23 earnings. So, issue looks aggressively priced. Also sudden rise in net profit and higher value of trade receivables are very surprising. Company is in business of trading agricultural products, which is highly fragmented and competitive segment. So we are giving AVOID rating to this SME IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1  Mr. Kaupilkumar Hasmukhbhai Shah
• 2  Mrs. Shitalben Kaupilkumar Shah