Blog

Arvind and Company Shipping Agency IPO plans to raise around ₹14.74 Cr through an IPO with a sale of up to 3,276,000 equity shares of ₹10 each. The company is primarily engaged in chartering business. Chartering activities of company mainly include chartering of Barge for commercial purposes. It is also into Hotels business.

About Arvind and Company Shipping Agency

• Located in Jamnagar, Gujarat, company was incorporated in the year 1987.
• Company derives its revenue majorly from 2 business verticals, as follows:
  • a) Chartering of Barges
  • b) Hotel and Hospitality
• Company is part of the Arcadia group which is into various port construction and chartering services. As on date, the group has a portfolio of approximately 34 barges to cater to its clients. Arcadia Group is a service provider to various port construction companies. Such services include stevedoring, Cargo handling, ship agency work, dredging, underwater trenching, underwater rock breaking, port constructions, port maintenance and other marine works.
• Company has been engaged in the business of Shipping and Forwarding agents. The revenue from operations consisted of commission income charged from the clients. The company is primarily engaged in chartering business. Chartering activities of company mainly include chartering of Barge for commercial purposes. As on the date of this Prospectus, it owns total of 5 (Five) Barges.
• Barges are flat-bottomed boats that are primarily used for Port construction, maintenance, dredging, transporting goods, placements of Cranes and Backhoes, and materials handling on inland waterways, rivers, and canals, as well as in coastal areas. They work by being towed by tugboats or pushed by push boats, which provide the propulsion needed to move the barge through the water. Barges are designed to be flat and wide to maximize their cargo capacity, and their flat bottoms allow them to operate in shallow waterways and navigate under low bridges.
• Company manages two hotels viz. “Hotel Millennium Plaza” and “Hotel 999” out of which “Hotel Millennium Plaza” is owned by the company since Year 1997 while Hotel “Hotel 999” is owned by promoter Mr. Arvind Kantilal Shah, but it is managed by company based on the rent agreement in May, 2023.
• Promoters of company are Mr. Arvind Kantilal Shah, Mr. Vinit Arvind Shah, Mrs. Parul Arvind Shah and Mr. Chintan Arvind Shah.

Financials: Arvind and Company Shipping Agency IPO

Arvind and Company Shipping Agency IPO: Salient Points

• Promoters shareholding will drop from 100% to 73% post the IPO.
• The company plans to use the net proceeds from the offering as follows:

• Company plans to pursue expansion in future and is currently adding two barges to its existing fleet of five. Each barge adds on an average 2 crore annual revenue.
• Revenue Split between different verticals of the company

• Contribution to revenue from operations of top 1 / 3 / 5 customers; (Chartering of Barge)

• Its hotel is located 20 Kms away from Jamnagar at Jamnagar-Khambhadiya highway, and the area consists of some of the largest Petroleum refineries in India.
• End users of its barges are Construction companies who often require barges to transport heavy equipment, construction materials, or personnel to and from construction sites located near bodies of water. Barges can be used to transport materials such as sand, gravel, cement, steel, or machinery to support construction projects. customers include companies like L&T, Afcons Infrastructure Limited etc.
• Apart from above Shipping and logistics companies may require barges for bulk cargo transportation, such as agricultural products, coal, minerals, or containers. They can also be used for inland waterway transportation, reducing dependency on road or rail networks.
• Arvind and Company Shipping Agency IPO is coming at a PE ratio of 15.7x(fy23 earnings) and 8x PE based on FY24 earning annualized for first 2 month results.
• The company EBITDA has been on increasing trends since the last three financial year from ₹ 24.23 lakhs in the FY 2020-21 to ₹ 178.75 lakhs in the FY 2021-22 to ₹ 658.03 lakhs in the FY 2022-23 leading to CAGR growth of 421.14%. EBIDTA for the period ended May 31, 2023 was ₹214.32 Lakhs.
• The company PAT has been on increasing trends since the last three financial year from ₹ 23.75 lakhs in the FY 2020- 21 to ₹ 100.28 lakhs in the FY 2021-22 to ₹ 347.12 lakhs in the FY 2022-23 leading to CAGR growth of 282.29%. PAT for the period ended May 31, 2023 was ₹ 113.58 Lakhs.
• I intend to apply in Arvind and Company Shipping Agency IPO.
• Small size issue with no other IP{O is likely to result in very heavy over subscription.
• GMP as reported on social media has been around Rs. 15.
• SME IPO are quite illiquid and volatile and exit options sometimes is delayed.
• Beeline Capital Advisors Pvt Ltd is the Lead Manager to the issue. It has a good record. Past issues handled by them include Karnika Industries Limited, Hi-Green Carbon Limited, Kody Technolab Limited, Chavda Infra Limited, Vinsys IT Services Limited,Ahasolar Technologies, Pentagon Rubber, Remus Pharmaceuticals, Sotac Pharmaceuticals, RBM Infracon Limited, Transvoy Logistics, Dev Labtech, Viviana Power Tech, Vital Chemtech, Aristo Bio-Tech and Lifescience, Viaz Tyres, Vertexplus Technologies etc.
• Spread X Securities Private Limited has acted as SME IPO Market Makerin reccent issues that include Karnika Industries Limited, Hi-Green Carbon Limited, Kody Technolab Limited, Chavda Infra Limited.
• There are reports that SEBI is of view that SME stocks prone to more market manipulation and SEBI may be looking to curb speculation in SME stocks.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.