Started in 1993, Ushanti Colour Chem Limited is a Ahmedabad - Gujarat based company engaged in the business of manufacturing and trading of Dyestuffs. The Company manufactures Reactive and Direct Dyestuffs also known as Synthetic Organic Dyes. It also manufactures Copper Phthalocyanine, Blue Crude which is used for manufacturing of Dyestuffs. The pigment and dyestuffs cater to the raw material requirement of various industries including wool, ink, wood, leather, nylon, paper, textile, garment, cotton, plastic and paint etc. The company has 3 manufacturing facilities, spread over 2,739 sq. meters, located at Vatva GIDC in Gujarat. It also has its own Ice generation machinery. It recovers Ammonium Carbonate which is reused in the plant as well as sold to the Soda Ash Industry reducing wastage providing the company with incremental revenue. The company has acquired a land of 75,060 sq. meters at Saykha Industrial Estate- Bharuch, Gujarat to set up a new integrated manufacturing facility with an installed capacity of 16,140 tons per annum while permitted capacity being approx. 32,800 tons per annum. This facility at Bharuch is planned to manufacture Dyestuffs as well as intermediates used in manufacturing dyestuffs. Company intends to commence the operation in this facility by F.Y. 2020-21 in 2 phases. Ushanti generates around 41% of its revenue from the Domestic market while the rest 59% is generated from its export operations. Ushanti offers its products through traders. The manufactured dyes are sold as per the orders received by parties either directly from manufacturers or traders. As on March 31, 2018 company has 57 employees at the manufacturing facility and registered office. As per financial performance, company has posted total income/net profits of Rs. 24.15 cr. / Rs. 0.42 cr. (FY13), Rs. 35.42 cr. / Rs. 2.12 cr. (FY14), Rs. 29.71 cr. / Rs. 0.25 cr. (FY15), Rs. 25.11 cr. / Rs. 0.26 cr. (FY16), Rs. 29.62 cr. / Rs. 1.28 cr. (FY17) and Rs. 36.75 cr. / Rs. 2.39 cr. (FY18). From the financials, it suffered set back in both top and bottom line for FY15 and FY16, after that it has shown steady growth. For last three fiscals, it has posted an average EPS of Rs 3.09 and an average RoNW of 21.29%. Issue is priced at P/BV of 2.16 based on its NAV of 27.74 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 18, against industry average P/E of 46 as per prospectus document. Comparison with listed players are in above table, but they are not strictly comparable. As per FY18 earnings, issue looks fully priced when considering current market situation. On BRLM's front, for Pantomath Capital Advisors Private Limited this is the 80th IPO. As per financials, company's performance in last two fiscals improved consistently, RoNw is 21.29% for last three fiscals and issue is fully priced as per latest earnings. Company is planning to increase production capacity and reduce the debt with IPO funding, this may increase profitability of company significantly in upcoming years. So we give NEUTRAL rating to this SME IPO as per current market situation.
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