Arvee Laboratories IPO

6

Company Background

6.0/10

Price band

7.0/10

Company Financials

4.5/10

Industry Situation

7.0/10

Reliability

5.5/10

Pros

• Consistency in Revenue
• Mature Industry

Cons

• No regularity in Profits
• EPS not competitive in Industry
• IPO Objective to get rid of Promoter Debt

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Arvee Laboratories IPO Background

Arvee Laboratories is an Ahmedabad based company that was incorporated on 27th January 2012. Their major operations are, as the name suggests, in the chemicals domain where they primarily trade in this domain but going forward the business plans to set up manufacturing units as well. Some of the products the business looks into include:

• Polymer Modifiers
• Contrast Media Intermediates
• Drug Intermediates

As of now, Arvee Laboratories is coming up with an SME IPO with a total size of ₹8.91 Crore on 9th of February, 2018 with the total bidding duration of 5 days. With this IPO, Arvee Laboratories is putting up 26.5% of the company’s total equity at stake. Thus, there will be a corresponding decrease in the current shareholding pattern of the promoters.

Arvee Laboratories IPO Management

The business is headed by a young brigade. Here is a quick glimpse:

	Mr Shalin Sudhakarbhai Patel
	With more than 20 years of Experience in Engineering and Designs of different control systems, Mr Shalin Patel is the top man at Arvee Labs. He is the promoter and managing director of this chemicals company. He has worked with a bunch of companies from similar business domain and now takes care of purchase, sales, R&D and overall business development at Arvee Laboratories.

	Mr. Shalin Bharat Chokshi
	Mr Shalin Bharat Chokshi is the promoter and whole time director at Arvee Laboratories. He is a Master of Professional Account by education and has been working in areas such as Supplier development, Client Acquisition, Company positioning etc. Presently, he looks at company affairs and its related functions in Arvee Laboratories.

Getting to understand the company management is pretty crucial. Well, for one reason being that these are the people who are going to make use of the money raised through this public offering for business expansion. Thus, it makes total sense to get an idea about the background they come from and specific areas of work they look within the organization.

This is how the current ownership stakes stand at promoter level:

Arvee Laboratories IPO Data Points

Moving forward from the company basics, let’s talk about some of the specific data points related to this Arvee Laboratories IPO. This is an SME IPO and with this, the company is looking to raise a total funding of ₹8.91 Crore.

Generally, SME IPOs are of pretty low issue size, but this one is actually one of the lowest ones. The face value of the share has been kept at ₹10 and the bid price is ₹61. The IPO opens on 9th February and is open for bidding till 14th of February. At the same time, the book value of the share stood at ₹10.36 by March 31st, 2017.

The overall issue comprises of  14,60,000 equity shares with a 50% retail allocation. With the minimum bidding kept at 2000 shares in a lot, if interested, you will need to shell out ₹1,22,000 at the very least.

Post-bid completion, the company will be listed on the National Stock Exchange (NSE).

Arvee Laboratories IPO Financial Performance

Here is one of the most crucial blocks of information that you MUST consider, almost always, whenever you are looking to invest in an IPO.

Let’s take a quick look at the Revenue and Profit numbers posted by Arvee Laboratories in the last 5 years or so.

From the revenue’s perspective, the growth looks reasonable and consistent, pitching an ideal case for investment. However, when you look at the profit movement in the last few years, consistency is all missing.

Let’s chat the graphical representations of both these metrics. Like mentioned above, the revenue scene is completely impressive.

However, your eyebrows will raise when you look at the representation below. Although the company has seen ‘some’ profit, however, there are a couple of concerns:

• One, the profit percentage is pretty ordinary
• Monetarily or percentage-wise, the profit has no consistency

This is how it shows:

When we talk about some of the most important aspects further to the financial performance of a company, the ones that are shown below are the most sought out for. Especially when you compare these metrics with the peer companies from the same industry.

Here you go:

With not much to explain, you can understand easily that Arvee Laboratories does a pretty mediocre job in most of these aspects.

Arvee Laboratories IPO Objective

The company is pretty clear with what exactly they are looking to do with the funding raised through this initial offer. However, it does not really send out a pretty good message since the management is just looking to shed off some of the debt burdens it is bearing and paying out the interest on top of it.

This is what the business is looking to do with the IPO funding:

• Repayment of unsecured loans taken by promoters: ₹8.41 Crore
• Issue Expenses: ₹0.50 Crore

Further, it seems the business has put in the capital they need for business expansion, assuming the plan is in that direction in the first place.

Arvee Laboratories IPO Events

This is how the total IPO launch is going to unfold. As shown below, the Arvee Laboratories IPO opens on 9th February and will be open for bidding for 4 days. The final decision on whether you got the allotment or not will be done by 2oth February.

In case you are not able to secure an allotment, your money will be refunded or ASBA amount will be unblocked by 21st February. Furthermore, if you get the allotment, the shares will be credited to your Demat account the same day itself.

The company gets listed at NSE on 22nd February. Here are the details:

Arvee Laboratories IPO Contact Information

You can get in touch with the team at Arvee Laboratories at the following address and other respective contact details as mentioned below:

Arvee Laboratories IPO Recommendation

Finally, let’s talk about the showdown!

Whether you should be going ahead with this IPO or not?

Well, as per our analysis there are way too many reasons to avoid this SME IPO irrespective of whether you are a risk-savvy or a risk taker when it comes to trading in the stock market.

Some of the major concerns that tell us NOT to go ahead with this IPO are:

• IPO objective is to get rid of debts and loans taken-up by promoters. There is no discussion of company expansion at fund usage part, at all.
• The business has not seen a consistency in its profits in the last 5 years. That is remarkably disappointing.
• Even if we compare Arvee Labs with its closest competition companies, there is no much of a challenge posed by this chemical company.

Thus, all in all, we will suggest you avoid* this particular issue. Rest, we will leave it your wisdom and market understanding.

* The recommendation is just our viewpoint and you are advised to check with your financial advisory and/or stockbroker before investing any money in this IPO. A Digital Blogger bears no responsibility in such investments and the corresponding profits/losses.

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