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.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
Stay connected with us on social media platform for instant update click here to join our Twitter, & Facebook
We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.