Anisha Impex To Raise Rs 6.50 Crore Through IPO

Anisha Impex (AIL), a Delhi-based textile trading company is entering into the capital market with its public issue on 3 March 2014, which will close on 5 March 2014. The company is offering 65 lakh equity shares and has plans to raise Rs 6.50 crore through it. The equity shares are available at a fixed price of Rs 10 and proposed to be listed on BSE SME platform. The lead manager to the issue is Inventure Merchant Banker Services.

AIL was incorporated in the year 1999, and became a public limited company last year. From 1999 to 2005, the company was engaged in fabrication of various products. Later from the year 2006, AIL entered into the business of import and export of fabrics. After that, from 2009 onwards, it again changed its operations and started the business of trading of fabrics. AIL’s product range includes home furnishing fabrics for bedding, windows, dressing, decorative, pillows, table linen, kitchen linen etc. and other home decorative fabrics. The company currently has one store, located in Ghaziabad (UP). AIL’s client list includes Alps Industries, Argon Denims, BBD Traders, Fashions Flasher India, Nagar Handloom etc.

The home textile trading company’s revenue of Rs 28.8 crore on annualised basis (9M) for FY14E, will be 12% lower from the revenue in FY13 (Rs 32.7 crore). Also the purchases for FY14E will drop by 13% on annualised basis to Rs 27 crore, due to which the operating expenses is expected to drop by 13% to Rs 28 crore. This may lead to an improvement in the EBITDA by 25% to Rs 0.77 crore for the same period. However, the finance expenses of the company are increasing on a continuous basis (from last four-five years) due to the rise in its working capital requirements for its trading purposes. In turn, this is affecting the bottomline of the company. The annualised FY14 PAT of AIL is expected to be Rs 9.85 crore as against Rs 11 crore in FY13 (a drop of 12%). Expecting EBITDA and PAT margin for FY14 on annualised basis will be 2.7% and 0.34% respectively.

Further, AIL has plans to use the net proceeds for its long-term working capital requirement. The company will utilise the working capital to maintain its inventory for trading purposes. As proposed by AIL, it will use the fund to acquire fabric products of home furnishing decorative and also for the addition of new products in its trading business.

On valuations front, with the issue price of Rs 10, AIL will trade at a PE of 166.8x of annualised EPS of Rs 0.06. There is no pure peer of the company in listed space, however, we are comparing AIL with the listed companies having operations in manufacturing, wholesale, and retailing of textile. Lahoti Overseas (a company engaged in trading in yarn, raw cotton and fabric) and Cravatex (manufactures and markets sportswear and goods) are trading at a TTM price to earning multiple of 1.12x and 10x respectively, which is lower compared to AIL. The textile industry is a working capital intensive sector. As AIL is engaged in trading based business of home decorative textile, the margin is very low in this sector. Also, the expecting growth of the company for FY14 is to be lower on both the topline and bottomline front. Considering the intensive working capital-based business, higher valuations and the lower growth margin in the sector, we recommend investors to avoid the public issue.