Uma Exports Stock Lists at Premium, Rises 17% on Market Debut; Buy, Sell or Hold?

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Uma IPO ListingShares of the trader of agricultural products and commodities began trading at Rs 80 per share, up 17.65 per cent from the upper end of IPO price band of Rs 68 per share. The market cap of Uma Exports rose to Rs 276.56 crore. Total of 4.69 lakh shares of the firm changed hands amounting to a turnover of Rs 3.77 crore on the BSE. On NSE, the stock is listed at Rs 76, up 11.76 per cent to the IPO issue price. The market cap of the firm rose to Rs 269 crore. Total of 9.73 lakh shares of the firm changed hands amounting to a turnover of Rs 7.79 crore on the NSE.

The company successfully raised Rs 60 crore through its maiden public issue that was subscribed 7.67 times during March 28-30, 2022. The issue received good response from investors with the retail portion being subscribed 10.11 times, while qualified institutional buyers and non-institutional investors bid 2.81 and 2.22 times the allotted quota, respectively.

The company will utilise the issue the proceeds for working capital requirements. The price band for the offer was Rs 65-68 per equity share.

At the upper price band, the company sought a market capitalisation of Rs 229.9 crore while its peer Sakuma Exports quoted at a market cap of more than Rs 330 crore.

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.

What do Brokerages Say?

All brokerage houses had an ‘avoid’ rating on the issue given the expensive valuations, high debt on its books and low margin profile.

Mardwadi Financial Services had an ‘Avoid’ rating on the issue saying that the company operates in a competitive environment with low margins profile and does not offer much value to the investors. “Considering the FY21 adjusted EPS of Rs 3.63 on a post-issue basis, the company is going to list at a P/E of 18.71x with a market cap of Rs 2,299 mn whereas its peer namely Sakuma Exports is trading at a P/E of 16.20x,” they added. Uma Exports registered a net profit of in the last three financial years.

As of September 30, 2021, and March 31, 2021, Company’s outstanding total fund based indebtedness stood at Rs 5,628.20 lakhs and Rs 3,861.81 lakhs, respectively, Hem Securities highlighted in a note. “Company being into trading and marketing of agricultural produce and commodities has debt on the books. Although the company’s other ratios like margin & return on shareholder’s fund are better than its peer but looking after business profile & debt condition, we recommend “Avoid” on the issue,” they added.

Dr. Ravi Singh, Vice President and Head of Research, Share India, said: “Considering the high debt in its book and low margin profile, we recommend investors to avoid the Uma exports IPO. The expensive valuations of the company does not offer much value to the investors.”

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