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Momai Apparels IPO scan by VS Fernando
Since the advent of 'SME-Platform' in early 2012, the country's largest exchange (NSE) has received only six IPOs whereas the oldest exchange in Asia (BSE) has entertained as many as 73. The reason for this anomaly is not far to seek. There is a popular perception in the market that NSE's listing guidelines are more stringent, protecting the investors, than BSE's norms which are more liberal, entertaining the promoters!
The promoters of Momai Apparels had gone to BSE-SME in March 2013 for listing their flagship, Ashapura Intimates Fashion. But for Momai's public float they have approached NSE. Whereas Ashapura priced its IPO at Rs 40 and tapped Rs 21 cr, Momai is asking not less than Rs 78 a share, aggregating Rs 30 cr. Will Momai emulate Ashapura in fetching capital appreciation, or will it go down like other NSE-SMEs whose market returns are too low to compare with BSE-SMEs?
| OFFER AT A GLANCE |
| Name | Momai Apparels Ltd |
| Offer Amount | Rs 30 cr |
| Offer Quantity | 33.34 to 38.46 lakh shares of Rs 10 each |
| Offer on Total Equity | 23.95% to 26.66% |
| Post-issue Promo stake | 21.46% to 22.25% |
| Post-IPO Capital | Rs 14.43 cr |
| Offer Price | Rs 78 to Rs 90 |
| Application Quantity | 1,600 & Multiples of 1,600 |
| Offer Opens | 25-Sep-14 |
| Offer Closes | 30-Sep-14 |
| Listing | SME Platform of NSE |
| Rating | 4 out of 5 |
| Rated By | CARE |
| Lead Manager | Pantomath Capital Advisors |
| Syndicate Members | Hem Securities & Choice Equity |
| Registrar | Link Intime |
The Offer
Momai is making a fresh issue of Rs 30 cr through the book-building route with a price band of Rs 78 to Rs 90. Since the company has privately placed about 17.09 lakh shares (worth Rs 13.33 cr) with 83 high net worth public investors (HNIs) at Rs 78 a piece only a couple of weeks ago, it is most likely to fix the IPO price at the lower end of the band (Rs 78). In that case, the offer quantity would be 38.46 shares which would constitute 26.66% of the post-IPO capital of the company. The book running lead manager (BRLM) of the offer, Pantomath Capital Advisors, has underwritten the entire issue. Investors have to apply for a minimum of 1600 shares or Rs 124800. The shares are to be listed on the SME platform of NSE.
Issue Object
As per the offer document, Momai proposes to utilize Rs 7 cr towards acquisition of land for setting up new manufacturing facility and Rs 24 cr is earmarked for long term working capital. The new factory construction and plant & machinery are estimated to cost Rs 12 cr and Rs 7 cr respectively which are proposed to be met with a combination of bank debt, private placement proceeds and own funds. Nonetheless, the Rs 50 cr funding proposal has not been appraised by any independent agency and the deployment of funds is left to the discretion of the management.
Rating
Momai has been awarded 'CARE SME Fundamental Grade 4' by Credit Analysis and Research Ltd. The '4 out of 5' grade denotes for very good fundamentals. Incidentally, Ashapura Intimates, which has relatively better fundamentals, too received the same grade from CARE last year.
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