Uma Exports clocks robust debut, lists at 18% premium against issue price

Shares of Uma Exports made a robust debut on the bourses on Thursday, listing at Rs 80 apiece on the BSE — a 17.6 per cent premium against its issue price of Rs 68. On the National Stock Exchange (NSE) the company debuted at Rs 76 per share.

So after the listing, the shares extended their rally and hit a high of Rs 83 on the BSE, as against a 0.6 per cent dip in the BSE Sensex at 10:10 AM.

The three-day public offer of the company, engaged in export of agricultural produce and commodities, was subscribed 7.67 times during March 28-30, 2022. Retail portion was subscribed 10.11 times, qualified institutional buyers 2.81 times, and non-institutional investors 2.22 times.

Analysts had expected a muted listing for the company given tepid market sentiment, and the nature of the company’s businesses. Uma Exports is engaged in the trading and marketing of agricultural produce and commodities such as sugar, spices like dry red chillies, turmeric, coriander, cumin seeds, foodgrains like rice, wheat, corn, sorghum and tea, pulses and agricultural feed like soybean meal and rice bran de-oiled cake.

“UEL’s financial performance has shown inconsistency in exports revenue as well as in domestic markets. It has posted super earnings for the last two and half fiscal which raises concern over its sustainability. Turning down of support by QIBs indicates something fishy for this company’s records. Its business also carries the risk of seasonality and Government policies for commodities trades. Based on its FY22 super earnings, the issue price appears aggressive compared to its peer. There is no harm in skipping this issue,” Dilip Davda, an independent market analyst had said ahead of the IPO.

Those at Marwadi Financial Services, too, had assigned ‘avoid’ rating to the IPO as the company operates in a competitive environment with low margins and does not offer much value to investors.

As of September 2021, the company’s outstanding total fund-based indebtedness was Rs 56.28 crore, against Rs 38.62 crore as of March 2021. Revenue from operations has grown at a CAGR of 51.10 per cent during FY19 to FY21, while profit grew at a compound annual growth rate (CAGR) of 105.45 per cent and EBITDA at a CAGR of 52.76 per cent during the same period, but margin growth posted a CAGR of just 2 basis points.

“Considering the FY21 adjusted EPS (earnings per share) of Rs 3.63 on a post-issue basis, the company is going to list at a P/E (price-earnings) of 18.71x with a market cap of Rs 229.9 crore whereas its peer namely Sakuma Exports is trading at a P/E of 16.20x, which makes the issue expensive. Besides, the import / export of certain agricultural produce and commodities are subject to seasonal factors. Moreover, the company derives a significant portion of its revenue from its top 10 customers who contributed 34.17 per cent and 33.3 per cent in fiscal 2020 and 2021, respectively, making it prune to clientele loyality,” the brokerage had said in its IPO report.

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