Started in the year 2011, Sorich Foils Limited is Valsad - Gujarat based, an ISO 9001: 2015 certified company engaged in manufacturing and supplying a varied range of Aluminium Foils for Blister, Strip Foils, Cold Forming Foil, Coated GlassinePaper for Blister, Laminated Glassine Paper for Strip Pack, Child Resistant (CR) Foils, Aluminium Lid Foils,Triple Laminates, Flexible Packaging for Pharma & Food Industries, also FMCG packaging materials. These products are widely applicable in different industries such as Pharmaceutical Industries, FMCG packaging, Food and dairy industries, Confectionery / Chocolate industries & Personal Care Packaging. The manufacturing facilities of the Company is currently located at Valsad - Gujarat. Company has installed capacity of 1400 MT and currently operating at around 73% utilisation. The company has 38 employees on its payroll. For manufacturing processes, Company requires a wide variety of raw materials including Aluminium Foil,Paper, Adhesive, Ethyl Acetate (Solvent), HSL (Heat Seal Lacquer), Printing Ink, Polyester Film, Natural PolyFilms, Met CPP and BOPP Films etc. Company purchases these raw materials from a list of sources that they maintain, which has been approved by their internal quality control department. As per financial performance, SFL has posted total revenue/net profits of Rs. 19.63 cr. / Rs. 0.24 cr. (FY13), Rs. 22.86 cr. / Rs. 0.20 cr. (FY14), Rs. 25.06 cr. / Rs. 0.22 cr. (FY15), Rs. 26.90 cr. / Rs. 0.19 cr. (FY16) and Rs. 26.59 cr. / Rs. 0.33 cr. (FY17). For upto 31.01.18 of the FY18 it has earned net profit of Rs. 0.57 cr. on a turnover of Rs. 23.12 cr. So company's top-line and bottom-line are nearly identical since FY14 to FY17 and in FY18 it has shown increase in bottom-line with same top-line which looks surprising. For last three fiscals it has posted an average EPS of Rs. 4.17 on equity base of 1.0 cr and an average RoNW of 10.83%. The issue is priced at a P/BV of 0.98 on the basis of post issue NAV of Rs. 16.36. If we annualise latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 19.36. As per offer documents, industry average P/E is 7.25. As per offer documents it has shown Sysco Industries and PG Foils as its listed peers and they are trading at a P/E of around 1.8 and 6 respectively. (as on 21.05.18). So issue is expensive as per latest earnings when comparing with peers. On BRLM's front, for Saffron Capital Advisors Private Limited, this is the 2nd IPO since last two fiscals and last IPO listed with 20% premium on the day of listing. As of now that IPO is trading above issue price, but below listing price. As per financials, company's performance is stable, RoNW is 10.83% and issue is expensive as per latest earnings. So we give AVOID rating to this SME IPO as per current market situation.
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