The initial public offering of agricultural produce and commodities exporter Uma Exports received good response especially from retail investors on the first day of bidding, March 28 as the IPO was subscribed 2.14 times garnering bids for 1.97 crore equity shares against offer size of 92.30 lakh equity shares.
Retail investors bid 2.90 times the portion set aside for them, while the quota of non-institutional investors was subscribed 46 percent.
Qualified institutional buyers have not started bidding yet. Half of the offer is for QIBs, 35 percent for retail investors and the remaining 15 percent for non-institutional investors.
Uma Exports is planning to raise Rs 60 crore through its maiden public offer which is a fresh issue of shares.
The net proceeds will be used for working capital requirements and general corporate purposes.
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The price band for the offer, which closes on May 30, has been fixed at Rs 65-68 per share. Investors can bid for a minimum of 220 shares and in multiples thereafter.
Uma Exports is engaged in trading and marketing agricultural produce and commodities such as sugar, spices like dry red chillies, turmeric, coriander, cumin seeds, foodgrains like rice, wheat, corn, sorghum and tea, pulses, and agricultural feed like soya bean meal and rice bran de-oiled cake.
The company imports lentils, faba beans, black urad dal and tur dal in India in bulk from Canada, Australia and Myanmar. It is a B2B trader specialised in sugar and lentils, maintaining and distributing stocks to institutional parties like manufacturers and exporters.
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The company has a pan-India market presence and exports to countries such as Sri Lanka, UAE and Afghanistan and corn to Bangladesh, etc.
Considering the FY21 adjusted earnings per share of Rs 3.63 on a post issue basis, the company is going to list at a P/E (price-to-earnings) of 18.71x with a market cap of Rs 229.9 crore whereas its peer Sakuma Exports is trading at a P/E of 16.20x, says Marwadi Financial Services.
The brokerage has assigned 'avoid' rating to this IPO as the company operates in a competitive environment with low margins (Ebitda margin of 2.83 percent in FY21) and does not offer much value to investors.
Uma Exports clocked 46.3 percent year-on-year growth in profit at Rs 12.18 crore in FY21, but revenue declined 7.2 percent to Rs 752.02 crore over the previous year.
It recorded profit of Rs 8.97 crore on revenue of Rs 523.9 crore for the six months ended September 2021.
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