BSE SME IPO Review, Should you invest in Megastar Foods or Innovators Facade IPO?

BSE SME IPO of companies namely Megastar Foods Limited and Innovators Facade Systems Limited opens today. Lot of SMEs are raising funds through initial public offers (IPO).  The increased representation of SMEs to get themselves listed represents the Indian growth story.

Megastar Foods Limited IPO 

Megastar Foods Limited, engaged in production of food products related to wheat. The company has an installed capacity of 81000 MT per year.

Megastar Foods Limited IPO is intended to raise up to Rs 8.04 Cr and has a issue size of 2,680,000 equity shares of Rs 10. This issue opens on 14^th May and is closing on 16^th May, 2018. The issue price is Rs 30 per equity share with market lot of 4000 shares. The funds raised will be used to part finance its working capital and general corporate funding needs.

Innovators Facade Systems Limited IPO

Innovators Facade Systems Limited provides total solutions to its customers with respect to the requirement of façade installation in complex projects. The company is executing projects in lot of states, including Maharashtra, Goa, Haryana, Karnataka, Tamil Nadu, Uttar Pradesh and West Bengal. The company has executed around 200 projects and has long-standing reputed clients across the construction industry.

Innovators Facade Systems Limited IPO is raising Rs 40.75 Cr and is offering 5,660,800 equity shares of Rs 10 each. The price band of the issue is Rs 71 – Rs 72 per equity share with market lot of 1600 shares. This initial public offer also opens on 14^th May and is closing on 16^th May, 2018. The funds raised will be used for up-gradation and modernization of existing manufacturing facility, funding the working capital requirements of the company and for general corporate purposes.

Should You Invest in Any SME IPO?

Megastar Foods Limited in FY 17 has turnover of 97.76 cr. and net profit of Rs. 1.06 cr. For first nine months ended on 31.12.17 of FY18, the company has posted the net profit of Rs. 0.87 cr. on a turnover of Rs. 78.37 cr. The fully diluted equity post issue will be available at a P/E of around 25 plus against industry average of 38. The long term investors can therefore subscribe to the Megastar SME IPO.

Meanwhile, Innovators Facade Systems Limited does not have any peer listed. The company in FY 17 has delivered the turnover of 102.36 cr. and net profit of Rs. 1.82 cr. For first nine months ended on 31.12.17 of FY18, the company has posted the net profit of Rs. 5.75cr.  on a turnover of Rs. 126.30 cr. The fully diluted equity post issue will be available at a P/E of around 18 plus. Further, the company had suffered set back in bottom lines for FY16 and FY17 despite higher top lines. Therefore investing in this SME IPO will be a bit risky.

You can check the subscription status of the above SME IPOs on BSE Emerge platform.