Maiam Global Foods IPO-Should you invest?
After long time there is a Non SME IPO. Maiam Global Foods IPO has hit the market now. Investors are getting fed-up with SME IPO’s due to poor performance of such companies, but such companies showing interest in coming to market to mobilize funds through IPO. Maiam Global Foods is a Chennai based company coming for IPO to issue 90 lakh shares. In this article, I would provide details about the Maiam Global Foods IPO and whether it is good for investment or to avoid it.
About Maiam Global Foods
Maiam Global Foods is a Chennai based company engaged in the business of trading of pulses, spices and edible oil. It does the processing of pulses and spices. It also engaged in agriculture, processing and distribution of vegetable and fruits for commercial and captive use.
Issue details of Maiam Global Foods IPO
- IPO opens: 20-Feb-2014
- IPO closes: 28-Feb-2014
- Face value: Rs 10 per share
- Issue price: Rs 58 to Rs 62 per share through book building process
- Minimum bid: 200 shares
- Minimum investment: Rs 11,600 – Rs 12,400
- Listing: BSE
The purpose of the IPO: The funds would be used for the following purposes.
- Setting up new restaurants
- Green house cultivation, development
- Strengthening supply chain management
- Modernization of plant and machinery
- To meet the working capital requirement the company
- General expenses
Company Financials
- The company has posted revenue of Rs 29.84 Crores for the year ended Mar-2009 and Rs 116.13 Crores for the year ended Mar-2013. First 6 months of this financial it made a revenue of Rs 67.02 Crores.
- The company has posted a profit of Rs 0.27 Crore for the year ended Mar-09 Vs Rs 4.58 Crores for the year ended Mar-2013. First 6 months in this financial year, it made a profit of Rs 3.52 Crores.
Reasons to invest Maiam Global Foods IPO
- Good growth in revenue in last 5 years.
Reasons not to invest in an Maiam Global Foods IPO
- India Ratings assigned this IPO as Grade 1 which indicates poor fundamentals.
- Profits are thin. Even an SME is managing a margin of 3% to 4% in these days. Though the company has grown in terms of revenues, this company posted 3%+ profits for 3 out of 5 financial years. Two years it made marginal profits.
Recommendation / Investment strategy:
- Average EPS for the last 3 years is Rs 4.61. At issue price of Rs 58-62, this translates to a P/E ratio of 12.50 – 13.50. Based on 6 months profits for this financial year, the annualized EPS comes to Rs 7.73 which translates to a P/E ratio of 8 to 9. Somewhat I felt this issue is over priced.
- Considering low grading, thin margins and high issue price, my suggestion to investors is to stay away from such IPO.
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Suresh
Maiam Global Foods IPO
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Dear Suresh,
I subscribed the R J Biotech – IPO last year. I can't able to see good trading activity going on that company. Whats the future prospect for that company..Please, give your comments!!
Sathish, As indicated SME IPO’s carry some risk. RJ Biotech is 75% up from issue price.ย This company is good, you can stay invested. However for these SME IPO’s you can get out through listing gains in case you are getting good returns.ย
Thanks. I am waiting for your recommendations on some good IPOs. Keep up your good work.
BTW, I still do not have a demat a/c. Usually how much time it will take to setup a new demat a/c, so that I can invest in IPO. I am planning to go with HDFC, as I am not a frequent trader.
Hi Sri, These days it would not take much time. You can open demat account between 3 days to 10 days period which depends on the broker where you are planning to open
Hi Suresh
Good analysis and thanks for the recommendation. I am a big fan of IPO's as I have seen some good IPO's get you good returns. I have seen them in Coal India, Power Fin Corp etc. Please keep up these topics on IPO. It is very valuable to all of us.