Vishwas Agri Seeds Limited started its business in the city of Gondal near Rajkot, Gujarat in year 2009. Today Vishwas Agri Seeds Limited is in the business of processing quality seeds and supplying to farmers via there distribution network. The Company sells its seeds under the brand name "Vishwas". The seeds processing unit is equipped with optical sorting machine, they detect unwanted colours, subtle discoloration, size and shape defects, and foreign materials. Further the seeds undergo seed treatment process where seeds are processed by application of fungicide, insecticide, or a combination of both, to seeds so as to disinfect them from seed-borne or soil-borne pathogenic organisms and storage insects. Initially company started seeds processing unit at Gondal, Rajkot, Gujarat, India. Company ceased its operations in Rajkot Unit in June 2023 to migrate in its own larger facility in Ahmedabad. In July 2023, Company started commercial operations of seed processing unit along with Warehouse & Cold storage facility at Village: Bhayla, Taluka: Bavla, District: Ahmedabad, Gujarat. The said processing unit, equipped with modern technology is spread across 5 acres. Company has availed term loan of Rs. 11.51 Crores from HDFC bank via sanction letter dated June 22, 2022 to construct the factory shed, to built Cold Storage, Warehouse and Machinery of seed processing unit. The said unit also equipped with warehousing for storing 4200 MT (Metric ton) capacity of stock and cold storage facility to store 3000 MT of stock. Further, the company is in process of setting up its own corporate office building within the premise of the said seed processing unit. Company is also planning to setup an in-house seed testing Laboratory which will help them to improve the quality of the existing products, come with new products and its variants. The company is focused to provide good quality seeds. They are involved in each stage of seed processing ecosystem which includes contracting with farmers to germinate seed plants, they have dedicated staff for inspecting the seed plant in the fields to ensure quality of seeds and further processing the seeds and packing & storing of seeds. They have an Identified land parcel of 14,000 square feet within the Seed processing unit in Ahmedabad where they grow sample seeds and monitor its growth which helps them in adding different in the products. The Distribution network helps in supplying seeds in Different parts of India. As of March 31, 2023, they produced seeds for more than 40 different field crops, vegetables and have the presence of the products in the stage of Gujarat, Maharashtra, Rajasthan via the Seles and Distribution network. Vishwas has more than 75 varieties of Crops. The product portfolio includes crop seeds for Groundnut, Soybean, Wheat, Cumin, Green Gram, Black Gram Research Hybrid seeds for Cotton, Castor, Pearl Millet, Maize, hybrid vegetable seeds Chilli, Tomato, Brinjal, Watermelon, Sweet Corn, cabbage, Onion, Coriander Seeds, Fenugreek, Mustard, Lucern, Carrot, etc. As per the Restated Financial statements for the fiscal ended 2023, 2022 and 2021, the total revenue from operations of the Company stood at Rs. 6532.18 lakhs, Rs. 6485.80 lakhs and Rs. 5382.66 lakhs, respectively. The Profit after Tax for the similar period was Rs. 534.14 lakhs, Rs.247.94 lakhs and Rs. 116.30 lakhs respectively. Further the total revenue as per Restated Financials for the Half year ended on 30th September 2023, is Rs.4247.49 and the net profit after tax is Rs. 451.01 . As per financial performance, Vishwas Agri Seeds Limited has posted total income / net profits of Rs 53.83 Cr / Rs 1.16 Cr (FY21), Rs 64.86 Cr / Rs 2.48 Cr (FY22), Rs 65.32 Cr / Rs 5.34 Cr (FY23) and Rs 42.48 Cr / Rs 4.51 Cr (upto Q2 FY24). So as per previous financials data, company has shown average growth, but sudden rise in net-profit just before IPO raises doubts. Also trade receivables is around 30% of FY23 total income. Company has posted an average EPS of Rs 12.43 and average RoNW of 45.56% for last three fiscals. Issue is priced at a P/BV of 1.93 as per NAV of 44.64 as on post issue. 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 34.69, 16.10 and 9.53 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Isk Advisors Private Limited is associated with this SME IPO and handled 5 SME IPOs in last 3 year. From last 5 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 5 SME IPOs, all are trading above or at par issue price. ( As on 15.03.24 ) As per financials, Vishwas Agri Seeds Limited has shown good results, RoNW is 37.28% and P/E is respectively 34.69, 16.10 and 9.53 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced, but sudden rise in net-profit just before IPO is very surprising. Company is in business of processing quality seeds, which is highly competitive and fragmented 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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