Equitymaster Agora Research Private Limited 4 April, 2014 Market data Current price* Market cap * Face value 200 150 100 50 Amrapali Capital S&P BSE SME IPO Rs 44.1 (BSE) Rs 431.2 m Rs10 BSE Code 536737 No. of shares 9.8 m Free float 48.3 % 52 week H/L* Rs 103.0/39.0 *as on 1 st April 14 Rs 100 invested is now worth 0 Oct-13 Dec-13 Feb-14 Mar-14 Amrapali Capital & Fin. Ser. Ltd. Company overview Amrapali Capital and Finance Services Ltd. was incorporated in Ahmedabad during 1994. The company is registered as trading and clearing member of NSE, BSE, MCX Stock exchange and United Stock Exchange of India (USE). It is also registered as a depository participant (DP) with NSDL (National Securities Depository Limited). Amrapali Capital offers various financial services under a single roof like trading services that includes equity broking, besides it also provides research, mutual fund advisory, F&O and currency derivatives. The company has also been registered as a depository participant with NCDEX in the commodity space during FY13. It also got registered with Comtrack in 2013 for opening up of the commodity demat account along with mapping them with NCDEX. The company has also registered itself as a market maker with BSE SME platform. Amrapali Capital has geographical presence in New Delhi, Mumbai and few cities of Gujarat. The company launched its IPO on the BSE SME segment during October 2013. The main purpose of the public issue was to enhance margin money maintained with the stock exchanges. The margin would enable the company with more business opportunities in equities and derivatives market. Stock price performance Amrapali BSE SME IPO 1-m 5.0% 20.6% 6-m* -56.4% 89.9% *Since listing Shareholding (Dec-2013) Category (%) Promoters 51.7 DIIs 0.0 FIIs 0.0 Others 48.3 Total 100.0 Company strengths Experienced management team. The company got incorporated during 1994. So, the management has expertise of over 20 years in to the industry. The company has long and cordial relationship with clients. It plans to expand the business by expanding the client base and increasing relationship with existing clients. It plans to increase revenue by offering different products to the same client. The company has limited geographical presence in the markets of New Delhi, Mumbai and cities of Gujarat like Ahmedabad and Rajkot. In order to cater to this concentration risk, it has proposed a plan to expand its branches in to other regions and is also open to go through inorganic route of acquisition. Report prepared by Equitymaster Agora Research Private Limited. www.equitymaster.com info@equitymaster.com Amrapali Capital is registered as a market maker with BSE for their SME platform. This provides the company with new business opportunity as market making is compulsory for three years for companies that come up with IPO on the SME platform. Page 1 of 7
Industry overview Capital market is one of the most important segments of the Indian financial system. It avails companies to meet their requirements of the long-term funds. It refers to all the facilities and the institutional arrangements for borrowing and lending funds. It is concerned with the raising of capital for purposes of making long-term investments in the business. The market consists of a number of individuals and institutions (including the Government) that canalise the supply and demand for long -term capital and claims on it. The demand for long term capital comes predominantly from private sector manufacturing industries, agriculture sector, trade and the Government agencies. The supply of funds for the capital market comes largely from individual and corporate savings, banks, insurance companies, specialized financing agencies and the surplus of Governments. Capital market primarily consists of primary and secondary market. Primary market enables a new securities issue market. That securities which were not previously available are offered to the investing public for the first time. It is the market for raising fresh capital in the form of shares and debentures and/or offer for sale of investors holding. The companies could offer new securities by issuing an initial public offering (IPO) The secondary market is a market where securities are traded after being initially offered to the public in the primary market and/or listed on the stock exchanges. Majority of the securities trading is done in the secondary market. That includes equity markets and the debt markets. For a general investor, the market provides an efficient platform for trading their securities. For company management the secondary equity markets serve as a monitoring and control that facilitate value enhancing control measures. Financials at a glance (Rs m) FY09 FY10 Operating income -63.3 148.9 58.4 85.2 136.7 Operating income growth (%) -335.4% -60.8% 45.9% 60.4% Operating profit -28.3-26.5-1.8-4.8-38.7 Operating profit margin (%) 44.8% -17.8% -3.1% -5.6% -28.3% Net profit 1.9 1.5 0.5 1.3 1.7 Net profit margin (%) -3.0% 1.0% 0.9% 1.5% 1.2% No. of shares (m) 7.20 7.20 7.20 7.20 7.20 Balance Sheet Current assets 841.0 937.7 803.9 762.8 739.9 Fixed assets 16.3 19.2 18.7 15.8 12.8 Investments 0.1 0.1 0.1 0.7 0.7 Other assets 21.1 24.1 24.4 25.2 25.7 Total Assets 878.5 981.0 847.0 804.6 779.0 Current liabilities 352.6 456.2 318.8 276.5 250.0 Net worth 522.6 524.1 524.6 525.9 527.6 Long term debt 3.2 0.7 3.6 0.9 0.0 Other liabilities 0.0 0.0 0.0 1.3 1.3 Total liabilities 878.5 981.0 847.0 804.6 779.0 Note: Financial results are consolidated wherever applicable else standalone Page 2 of 7
Company Fundamentals Parameters FY10 Operating income per share (Rs) 20.7 8.1 11.8 19.0 Operating income /Net fixed assets (x) 7.8 3.1 5.4 10.7 Operating profit margin (%) -17.8% -3.1% -5.6% -28.3% Net profit margin (%) 1.0% 0.9% 1.5% 1.2% Inventory days 346.7 1115.1 845.6 293.5 Fully diluted earnings per share (Rs) 0.15 0.05 0.13 0.17 Dividend payout (%) 0.0 0.0 0.0 0.0 Debt to equity Ratio (x) 0.0 0.0 0.0 0.0 ROE (%) 0.3 0.1 0.2 0.3 ROCE (%) 2.6 3.3 3.1 3.0 Earnings per share (Rs) 0.21 0.07 0.18 0.24 Comparative Parameters FY13 Amrapali Capital Edelweiss Financial Ser. Performance metrics Operating income (Rs m) 137 21,773 PAT (Rs m) 2 1,785 OPM (%) -28.3 65.1 NPM (%) 1.2 8.2 ROE (%) 0.3 6.5 ROCE (%) 3.0 29.1 EPS (Rs) 0.17 2.3 Valuation metrics Current price (Rs) 44.1 28.8 Price to earnings (x) 252.9 12.5 Price to book value (x) 0.8 0.8 Page 3 of 7
Latest Result Performance Review Rs m FY13 1QFY14 Operating income 136.7 18.72 Other income 59.0 1.69 Total Income 195.7 20.4 Expenses 175.5 17.28 Operating profit -38.7 1.4 Depreciation 4.3 1.08 Interest 13.5 1.23 Profit before tax 2.5 0.8 Tax 0.8 0.25 Profit after tax 1.7 0.6 Operating profit margin -28.3% 7.7% Effective tax rate 31.1% 30.9% Net profit margin 1.2% 3.0% Diluted EPS 0.06 0.17 Note: Quarter results exclude extraordinary / exceptional items Wherever the results are consolidated we have taken consolidated numbers else standalone. NA = Not applicable. NM = Not meaningful Statement of Asset and Liabilities Rs m FY13 1QFY14 Current assets 739.90 714.85 Fixed assets 12.75 14.57 Investments 0.73 0.73 Other assets 25.66 25.66 Total Assets 779.03 755.80 Current liabilities 250.05 226.25 Net worth 527.64 528.21 Long term debt 0.00 0.00 Other Liabilities 1.35 1.35 Total liabilities 779.03 755.80 Page 4 of 7
Result performance review Amrapali Capital got listed on 31 st October 2013 on the BSE SME platform. The result performance and balance sheet statements mentioned above are pre-ipo since the company has not announced its postissue results yet. For instance, as per SME guideline it is not mandatory for companies listed on the SME platform to report quarterly result but half yearly results. So, Amrapali has not reported its December 2013 quarter result and would directly report its FY14 profit & loss and balance sheet statement. Its June 2013 quarter operating income was Rs 18.7 m as compared to Rs 136.7 m during FY13. For three month ended June 2013 quarter the company s other income stood about Rs 1.7 m. The company s June quarter operating profit margin improved to 7.7% as compared to -28.3% for the full year period FY13. Net profit stood Rs 0.6 m during, while net margin improved to 3% during June 2013 quarter. Diluted EPS during the same period was Rs 0.06 per share. Also, that the company recently passed a special resolution through postal ballot vote and got majority s approval. The resolution enables the company to undertake various new businesses that it had included in the object clause. Current valuation At the current price of Rs 44.1 per share, the company s stock trades at 0.8 times its FY13 book value. Page 5 of 7
Charts 10 5 Operating income growth 20 15 10 Net profit growth 5-5 -5-10 -10 Operating profit margin 2.0% Net profit margin -5.0% -1-15.0% 1.5% 1.0% -2-25.0% 0.5% -3 Return on equity Return on capital employed 0.4% 3.3% 0.3% 3.2% 0.2% 3.1% 0.1% 3.0% 2.9% Page 6 of 7
Important Message from Equitymaster: This report has been prepared exclusively for the BSE Investor Protection initiative. The data for this report has been sourced primarily from the company s Annual Report and other publicly available information. Equitymaster did not meet the management of this company in person. Equitymaster insists that it makes no recommendation by way of presenting this report. The only purpose of this report is to present publicly available information on the company to readers in a format that is easy to understand. Equitymaster Agora Research Private Limited. All rights reserved. Disclaimer: The information contained in this document has been compiled from sources we believe to be reliable, but we do not hold ourselves responsible for its completeness or accuracy. This document does not contain any views or opinions of Equitymaster and all such information is provided 'as is' without any warranty of any kind, and Equitymaster makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. This document should not be construed as an offer to sell or solicitation of an offer to buy any security in any jurisdiction. Equitymaster and its affiliates, its directors, analyst and employees will not be responsible for any loss or liability incurred to any person as a consequence of his or any other person on his behalf taking any investment decisions based on this document. Equitymaster and its affiliates and their officers and their employees may or may not hold any securities mentioned herein. Equitymaster and its affiliates may from time to time, have a consulting relationship with a company being reported upon. Page 7 of 7