Uma Exports IPO: The initial public offering (IPO) of Uma Exports continues to get a good response from retail investors on March 30, the final day of bidding. The agricultural produce and commodities trader is looking to mop up Rs 60 crore through the issue. The price band for the offer, which closes March 30, is Rs 65-68 a share. Incorporated in 1988, Uma Exports is engaged in trading and marketing of agricultural produce and commodities in India from Canada, Australia and Myanmar. It has expanded its business in Malaysia, UAE, Sri Lanka, and Bangladesh. It deals in sugar, spices like dry red chillies, turmeric, coriander, cumin seeds, food grains like rice, wheat, corn, sorghum, and tea, pulses, and agricultural feed like soybean meal and rice bran de-oiled cake.
Uma Exports IPO: Price Band
The company is selling its shares in the range of Rs 65-68 apiece via its initial stake sale and the issue entirely consists of issuance of fresh equity shares with a face value of Rs 10 each. Shares of the company will be listed at both BSE and NSE, whereas investors can bid for the issue till Wednesday, March 30. Investors can bid for a minimum of 220 equity shares.
Uma Exports IPO: Subscription Status
The offer has received bids for 3.84 crore equity shares against an IPO size of 92.3 lakh shares, with the issue being subscribed 4.17 times. Retail investors have subscribed 5.62 times the allotted quota, while the portion set aside for non-institutional investors was subscribed 94 percent and that of qualified institutional investors was fully booked.
Uma Exports IPO: GMP
Shares of Uma Exports are yet to make its debut in the grey market. So, Uma Exports IPO GMP (grey market premium) is still not available on the second day of bidding.
Uma Exports IPO: Financials
Despite the company name indicating an export company, over FY20-21, Uma Exports’ business of import of agro commodities and sale in domestic market constituted around 93 percent of the total revenue. In H1 FY22, business from exports was 15.7 percent of the revenue.
The company has reported a short but strong financial performance over FY19-21, which is being characterised by business growth with stability in the profitability margins, said Choice Broking. It reported a 51.1 percent CAGR rise in consolidated revenue to Rs 750.7 crore in FY21, mainly on the back of higher sales volume over FY19-21.
The gross margin declined from 14.7 percent in FY19 to 10.3 percent in FY21. However, Choice Broking said mainly on account of lower employee costs and other expenses, EBITDA margin stood at an average of 2.5 percent over FY19-21. Consolidated EBITDA (earnings before interest, tax, depreciation and amortisation) increased by 52.7 percent CAGR to Rs 19.9 crore in FY21.
Uma Exports IPO: Valuations
At the higher end of the price band, the market capitalisation of the company works out to Rs 230 crore.
“At a higher price band of Rs 68, Uma Exports is demanding a P/E (price-to-earnings) multiple of 18.9x (to its TTM earning of Rs 3.6), which is at discount to only listed peer. Considering the lower trading margins, the business of the company doesn’t seem to be sustainable. Thus we are assigning an ‘avoid’ rating for the issue,” said Choice Broking.
Uma Exports IPO: Should You Subscribe?
Uma Exports is bringing the issue at a P/E multiple of 14x on pre issue FY21 EPS basis, said Hem Securities in its IPO report. The company, which is into trading and marketing of agricultural produce and commodities, has debt on books, it added.
“Although the company’s other ratios like margin & return on shareholder’s fund are better than its peers but looking after business profile and debt condition, we recommend ‘Avoid’ on the issue,” it added.
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