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Uma Exports IPO subscribed 4.17 times, QIB quota fully booked

The agricultural produce & commodities trader is planning to mop up Rs 60 crore through the issue. The price band for the offer, which closes on March 30, is Rs 65-68

March 29, 2022 / 05:20 PM IST
 
 
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The initial public offering (IPO) of Uma Exports continues to get good response from retail investors on March 29, the second day of bidding.

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.

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.

At the higher end of the price band, the market capitalisation of the company works out to Rs 230 crore.

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"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.

The West Bengal-based agri-commodity trader is going to utilise Rs 50 crore, the net issue proceeds, for working capital requirements.

Incorporated in 1988, Uma Exports is a B2B trader engaged in the trading and marketing of agricultural produce and commodities such as 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.

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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.

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Moneycontrol News
first published: Mar 29, 2022 02:44 pm
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