What you must know about Sameera Agro and Infra IPO?

Sameera Agro and Infra Ltd was incorporated in the year 2002 as Sameera Homes, which reflected its original business model comprising of infrastructure development and construction activities. However, over the years, the company has also diversified into the agri sector, which explains the new name. However, both are active businesses of Sameera Agro and Infra Ltd. On the construction and infrastructure development side of the business, Sameera Agro and Infra Ltd plans, develops, and constructs residential and commercial spaces. These include apartments, townships, multi-storeyed complexes, gated communities, bridges, flyovers, industrial parks, water works, gas pipelines etc.

The expansion into the agri space only happened in the year 2021 when the company ventured into processing, drying, sale, purchase, marketing, and distribution of agricultural commodities. These include agricultural commodities like pulses, cereals, grains etc. In terms of specific product preference, Sameera Agro and Infra Ltd is engaged in the processing and sale of urad dal, moong dal, tur dal, black gram, green gram, mung beans, red lentils, yellow dal, split yellow peas, etc. The company has currently leased a manufacturing and processing unit near Hyderabad, which is at the confluence of three states viz. Telangana, Karnataka, and Maharashtra. Sameera Agro and Infra Ltd is also negotiating for the acquisition of processing mills on lease basis at Guntur and Rajahmundry in coastal Andhra Pradesh, the neighbouring state.

Key terms of the SME IPO of Sameera Agro and Infra Ltd

Here are some of the highlights of the Sameera Agro and Infra IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 21st December 2023 and closes for subscription on 27th December 2023; both days inclusive.
   
• The company has a face value of ₹10 per share and it is a fixed price issue. The issue price for the fresh issue IPO has been fixed at ₹180 per share. Being a fixed price issue, there is no question of price discovery in this IPO.
   
• The IPO of Sameera Agro and Infra Ltd has only a fresh issue component and no offer for sale (OFS) portion. It must be remembered that the fresh issue portion is EPS dilutive and equity dilutive, but OFS is just a transfer of ownership and  hence it is not EPS or equity dilutive.
   
• As part of the fresh portion of the IPO, Sameera Agro and Infra Ltd will issue a total of 34,80,000 shares (34.80 lakh shares), which at the fixed IPO price of ₹180 per share aggregates to a fresh fund raising of ₹62.64 crore.
   
• Since there is no offer for sale (OFS) portion, the fresh IPO size will also double up as the overall IPO size. Therefore, the overall IPO will also comprise of the issue of 34,80,000 shares (34.80 lakh shares) which at the fixed IPO price of ₹180 per share will aggregate to overall IPO size of ₹62.64 crore.
   
• Like every SME IPO, this issue also has a market making portion with a market maker portion allocation of 1,84,000 shares. The market maker for the issue is SVCM Securities Private Ltd and they will provide two-way quotes to ensure liquidity on the counter post listing and low basis costs.
   
• The company has been promoted by Satya Murthy Sivalenka and Kameswari Satya Murthy Sivalenka. The promoter holding in the company currently stands at 97.49%. However, post the fresh issue of shares in the IPO, the promoter equity holding share will get diluted to 69.00.
   
• The fresh issue funds will be used by the company for construction of ongoing projects, construction of new multiplex, meeting the working capital needs of the Agritech business and also partially for general corporate expenses of the company.
   
• First Overseas Capital Ltd will be the lead manager to the issue, and KFIN Technologies Ltd will be the registrar to the issue. The market maker for the issue is SVCM Securities Private Ltd.

IPO allocation and minimum lot size for investment

Sameera Agro and Infra Ltd has allocated 5.02% of the issue size for the market makers to the issue, Arham Shares Private Ltd. The net offer (net of market maker allocation) will be divided equally between the retail investors and the HNI / NII investors. The breakdown of the overall IPO of Sameera Agro and Infra Ltd in terms of the allocation to various categories are captured in the table below.

The minimum lot size for the IPO investment will be 800 shares. Thus, retail investors can invest a minimum of ₹144,000 (800 x ₹144 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 1,600 shares and having a minimum lot value of ₹288,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

Key dates to be aware of in the Sameera Agro and Infra IPO

The SME IPO of Sameera Agro and Infra Ltd opens on Thursday, December 21st, 2023 and closes on Wednesday, December 27th, 2023. The Sameera Agro and Infra Ltd bid date is from December 21st, 2023 10.00 AM to December 27th, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is December 27th, 2023.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account. The credit of shares to the demat account on December 28ths 2023, will be visible to investors under the ISIN Code – (INE0PZA01015).

Financial highlights of Sameera Agro and Infra IPO

The table below captures the key financials of Sameera Agro and Infra IPO for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

Here are some of the key takeaways from the financials of the company for the last 3 years.

• The revenue has been steadily growing. However, the profit growth momentum is only visible in the last two years. While ROE is attractive due to low equity base, the net margins are quite low for the real estate business.
   
• Despite being a capital heavy business, the asset turnover ratio or the asset sweating ratio has well above 2, which is impressive. On top of that, the positive ROA is also icing on the cake.

The company has latest year EPS of ₹11.91 and weighted average EPS of ₹8.61 for the last 3 years. However, a lot will depend on what level the EPS sustains in the long run. By latest year valuations, the P/E of 15X looks fully priced, although the profit ratios are strong. Investors should be asking question about how the real estate business and the agri business are respectively contributing to profits and top line of the company. Investors need to treat carefully before investing in this company, despite the strong financials.