OBIL Allures Investors By Offering 21 Lakh Equity Shares

Biswajit Yadav / 19 Mar 2014

OBIL Allures Investors By Offering 21 Lakh Equity Shares

Oceanaa Biotek Industries (OBIL), a specialised food testing laboratory will issue 21 lakh equity shares of Rs 10 per share. The company will set up a specialised food analysis laboratory to perform consumer food testing for the food producers. The IPO is open till the 20th of March, 2014.

Oceanaa Biotek Industries (OBIL) earlier known as Oceanic Shelters is a specialized food testing laboratory which has came up with an IPO offer to raise Rs 2.10 crore from the primary market. The company will issue 21 lakh equity shares of Rs 10 per share and will be listed on BSE SME platform. The IPO has started from 18 March, 2014 and will end on 20 March, 2014.


Brief Details of the Issue
ParticularsNo. of Shares
Outstanding Equity Share Prior to Issue 3118150
Equity Shares Offered 2100000
Reserved for Market Makers 105000
Net Issue to Public 1995000
Outstanding Equity Share Post Issue 5218150


Of the total issued equity shares 5% (1,05,000 equity shares of Rs 10 each) will be reserved for subscription by market makers to the issue and 95%, i.e. 19,95,000 equity shares will be the net issue. The issue and the net issue will together constitute 40.24% and 38.23% respectively, of the post issue paid up equity share capital of the company.

The main objective of the company behind raising the fund is to setup a food testing analysis lab and to meet the issue expenses. 


Details of Requirement of Fund
ParticularsRs. in Crore
To set up food testing analysis lab 1.82
Issue expenses 0.28
Total 2.1


OBIL is presently engaged in the business of trading in Aquaculture products like tiger shrimp seeds, aqua shrimp hatchery, aqua shrimp farming, marine & vegetable processing, aseptic canning & bottling etc. The company will set up a specialised food analysis laboratory to perform consumer food testing for food producers. Food testing laboratories plays a vital role in food safety and standards. Their target customers are food and feed industry, hotels & restaurants, government regulatory bodies, agriculture and food processing department and overseas clients. 

Due to increasing income and health consciousness the Indian food industry has witnessed a strong growth over the last few years. India is the world's largest food producer next to China. The agriculture and the processed food exports has shoot up by 63% to Rs 101504 crore till December 2013 as against 62244 crore in the corresponding period of the last year. The industry is currently worth Rs 247680 crore and is expected to grow at a rate of 11% to Rs 408040 crore by the year 2018. This is according to the India food service report 2013 by National Restaurant Association of India (NRAI). 

On financial performance, the company has posted total revenue of Rs 63.58 lakh for the half yearly ended September 30, 2013 and the Profit After Tax (PAT) was at Rs 18.55 lakh during the same period. The company does not have any debt.

On valuation front, OBIL offer price is 13.88x (P/E ratio) times its annualised EPS of Rs 1.39 per equity share for FY14. The OBIL offer price is slightly over valued considering its listed peers such as Choksi lab and Vimta Lab which is offering at a P/E of 3.12x and 9.75x respectively, their trailing twelve months EPS.


P/E Comparison
CompaniesP/E
OBIL 13.88
Choksi Lab 3.12
Vimta Lab 9.75


Considering the higher P/E ratio and minimum lot size of 10000 equity shares (i.e Rs 100000 per lot) and the fact that it is trading on the most illiquid platform the BSE SME, we therefore recommend that only high risky investors can go for this IPO. The moderate risky investors can go for other better alternatives.

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