Ashapuri Gold Ornament Limited

Started in 2008, Ashapuri Gold Ornament Limited is engaged in the business of wholesale trading of gold jewellery. Company's products portfolio includes Ring, Nose Ring, Bangles, Earring, Anklets, Necklace, Pendant etc. They sell antique, traditional, bridal contemporary and combination designs which cater diversified customer segments. The company is having a showroom of 2945 sq. feet in Ahmedabad. The company only sell Hallmark certified jewellery and those are manufactured on Job work basis at Ahmedabad and Rajkot. Ashapuri has also entered into a partnership with Blue-Onxy Lifestyle which carrying business of Branded Readymade Garments. They also have the plan to open multiple hains of showrooms of Readymade Garments over a period of time in various cities across Gujarat. It currently employs 9 employees on its payroll. The competitive strengths of the company are: • More than 10-years of experience• Showrooms at prime locations in Ahmedabad• A wide range of products• Unique and antique designs On the financial performance front, Ashapuri has posted turnover/net profits of Rs. 55.63 cr. / Rs. 0.06 cr. (FY16), Rs. Rs. 37.29 cr. / Rs. 0.04 cr. (FY17), Rs. 46.93 cr. / Rs. 0.07 cr. (FY18).  For the first eight months of FY19 ended on 30.11.18, it has earned a net profit of Rs. 0.31 cr. on a turnover of Rs. 49.51 cr. Sudden jump in top-line and bottom-line of FY19 is very surprising. For last three fiscals, Ashapuri has posted (on a consolidated basis) an average EPS of Rs. 0.04 and an average RoNW of 0.39%. The issue is priced at a P/BV of 2.40 on the basis of its NAV of Rs. 21.22 post issue. If we annualise latest earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 221 thus issue appears very highly priced and if we take FY18 earnings, then P/E is around 1487. Comparison with listed peers is given in above table.  On BRLM's front, for Fedex Securities Limited this is the 6th SME IPO. From last 5 IPOs, all opened above issue price with 1% to 40% gains. As of now from last 5 IPOs, 2 are trading below or at issue price and remaining above. ( As on 12.03.19 ) Company has shown mixed results, RoNW is 0.39% and issue looks very highly priced with respect to current earnings. Company is planning to enter into another business of readymade garments. Performance of BRLM is good. So we give AVOID rating to this SME IPO.

• 1 Mr. Saremal Soni
• 2 Mr. Dinesh Soni 
• 3 Mr. Jitendra Soni