Uma Exports Makes Strong Debut on the BSE, Lists at 18% Premium

Uma Exports’ stock had a strong start on the stock exchanges on Thursday, debuting at Rs 80 per share on the BSE, a 17.6 percent premium to its issue price of Rs 68. The firm began trading on the National Stock Exchange (NSE) for Rs 76 per share. As a result of the listing, the shares continued to rise and reached a high of Rs 83 on the BSE, compared to a 0.6 percent drop in the BSE Sensex at 10:10 AM.

The firm, which exports agricultural goods and commodities, had a three-day public offering on March 28-30, 2022, that was subscribed 7.67 times. The retail component received 10.11 times the number of subscriptions, qualified institutional purchasers received 2.81 times the number of subscriptions, and non-institutional investors received 2.22 times the number of subscriptions.

Given the sluggish market and the nature of the company’s activities, analysts had predicted a subdued debut. Sugar, spices such as turmeric, dried red chilies, coriander and cumin seeds, food grains such as wheat, rice, sorghum, maize and pulses, tea, and agro output such as rice bran deoiled cake and soybean meal are all traded and marketed by Uma Exports.

The financial success of UEL has been inconsistent, both in terms of export income and in terms of local markets. It has had record profits for the last two and a half fiscal years, raising concerns about its long-term viability. The fact that QIBs are refusing to help implies that something is wrong with this company’s records. Seasonality and government rules for commodities transactions can pose risks to its operations. In comparison to its peers, the issue price looks to be aggressive based on FY22 super-profits.

During the period from FY19 to FY21, revenue from operations increased at a CAGR of 51.10 percent, while profit increased at a CAGR of 105.45 percent and EBITDA increased at a CAGR of 52.76 percent, but margin growth was just 2 basis points.

On a post-issue basis, based on FY21 adjusted EPS (earnings per share) of Rs 3.63, the business would list at a P/E of 18.71x with a market size of Rs 229.9 crore, but its peer, Sakuma Exports, is trading at a P/E of 16.20x, making the issue costly. Furthermore, seasonal considerations influence the import and export of specific agricultural products and commodities. Furthermore, the firm obtains a substantial percentage of its income from its top ten clients, who contributed 34.17 percent and 33.3 percent, respectively, in fiscal 2020 and 2021, indicating that client loyalty is important.

Subscription Status

On March 30, 2022 5:00:00 PM, the Uma Exports IPO was subscribed 7.67 times. In the retail sector, the public issue was subscribed 10.11 times, 2.81 times in the QIB category, and 2.22 times in the NII category.

Competitive Advantages

• Project management and execution abilities have been shown by an experienced management team.
• In the agricultural commodities trade market, the firm has a strong position.
• Proven track record of profitability and growth.
• Long-term customer relationships and recurring business.

Goals of the Offering

• Augmentation of working capital requirements.
• General Corporate Purposes.

Wrapping Up

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