Sameera Agro and Infra
- Sameera Agro and Infra has come out with an initial public offering (IPO) of 34,80,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 180 per equity share.
- The issue will open on December 21, 2023 and will close on December 27, 2023.
- The shares will be listed on NSE Emerge platform.
- The share is priced 18 times higher to its face value of Rs 10.
- Book running lead manager to the issue is First Overseas Capital.
- Compliance Officer for the issue is Pratibha Shivprasad Kumrawat.
Profile of the company
Sameera Agro and Infra is a multi-faceted infrastructure development and construction of residential, commercial spaces, apartments, townships, multi storied complexes, gated communities, landscapes, bridges, flyovers, subways, alleys, industrial parks, laying of water pipelines, gas pipelines and other related works with the primary objective of delivering quality and value to its clients. Over the years, the company has fortified its commitment by delivering massive and technically-driven projects across India on tough terrains and in a tough industry environment. It has a breadth of experience encompassing the major sectors of the infrastructure industry.
S. S. Murthy started with in a moderate way development of land into residential layouts and plots, catering to needs of small, medium income group of people with schemes and instalments to provide to the land buyers instalments-based payment towards purchase of plots of land by the people under his leadership, Company has developed number of residential layouts in and around Hyderabad and Secunderabad, the then undivided State of Andhra Pradesh. The Company, thus grown by leaps and bounds as a real estate developer with a diversified portfolio of real estate projects, the Company has undertaken customised real estate projects, infrastructure projects, marketing and commercialisation of developed land parcels.
Further, as a part of the other business activity from the year 2021, the Company has expanded its wings to processing, drying, sale, purchase, marketing and distribution of agricultural commodities of pulses, cereals, grains, such as urad dal, moong dal, toor dal etc., - peeled and un peeled, mung dal, black grans, green gram, mung beans, red lentils, yellow dal, split yellow peas etc. the company has established over a period of 2 years strong customer network, suppliers’ network and warehouses for storage of goods. The company has got manufacturing and processing unit on lease basis nearby Hyderabad which is accessible for all the three states viz., Telangana, Karnataka and Maharashtra. The company is also in the process of acquiring processing mills on lease basis at Guntur and Rajahmundry in Andhra Pradesh.
Proceed is being used for:
- Construction of ongoing project
- Construction of new multiplex
- Meeting the existing working capital requirement for its agro business
- General Corporate Expenses
Industry Overview
India’s high growth imperative in 2023 and beyond will significantly be driven by major strides in key sectors with infrastructure development being a critical force aiding the progress. Infrastructure is a key enabler in helping India become a $26 trillion economy. Investments in building and upgrading physical infrastructure, especially in synergy with the ease of doing business initiatives, remain pivotal to increase efficiency and costs. Prime Minister Narendra Modi also recently reiterated that infrastructure is a crucial pillar to ensure good governance across sectors. The government’s focus on building infrastructure of the future has been evident given the slew of initiatives launched recently. The $1.3 trillion national master plan for infrastructure, Gati Shakti, has been a forerunner to bring about systemic and effective reforms in the sector, and has already shown a significant headway. Infrastructure support to nation’s manufacturers also remains one of the top agendas as it will significantly transform goods and exports movement making freight delivery effective and economical.
India has to enhance its infrastructure to reach its 2025 economic growth target of $5 trillion. India's population growth and economic development requires improved transport infrastructure, including through investments in roads, railways, and aviation, shipping and inland waterways. The government has also suggested an investment of $750 billion to strengthen railway infrastructure, and envisioned the Maritime India Vision 2030 which estimates massive investments in world-class infrastructure development at Indian ports. Global investment and partnerships in infrastructure, such as the India-Japan forum for development in the North East are also indicative of more investments.
Meanwhile, India is one of the major players in the agriculture sector worldwide and it is the primary source of livelihood for 55% of India’s population. India has the world's largest cattle herd (buffaloes), largest area planted to wheat, rice, and cotton, and is the largest producer of milk, pulses, and spices in the world. It is the second-largest producer of fruit, vegetables, tea, farmed fish, cotton, sugarcane, wheat, rice, cotton, and sugar. Agriculture sector in India holds the record for second-largest agricultural land in the world generating employment for about half of the country’s population. Thus, farmers become an integral part of the sector to provide it with means of sustenance. The future of Indian agriculture seems bright and promising with the advent of new technologies. The government has increased its focus on the sector, implementing various policies and initiatives to boost productivity and growth. India’s vast and diverse agricultural landscape, coupled with advancements in technology, provides immense opportunities for farmers to harness their potential and increase yield. In addition, start-ups in the agricultural sector are working towards providing innovative solutions to farmers in terms of supporting them with better productivity, measuring tools and other data-driven strategies.
Pros and strengths
Established brand: The company’s strong brand and the customer goodwill generated from its continued focus on customer satisfaction has been a key attribute to the growth of its business. The company’s customer-centric approach includes comprehensive support to customers from enquiries to delivery of possession of units, as well as measures implemented to address any customer grievance. The company’s continued engagement with customers even subsequent to sale of units and delivery of possession has resulted in further strengthening its brand and customer goodwill. Customer goodwill also translates into significant customer referrals that further strengthen its strong brand and sales network resulting in increased sales.
Differentiated and diversified product offerings: The company is one among the prominent residential real estate developers in Hyderabad and Secunderabad based on economical prices for its apartments offering to the small and medium income group of people with apartment sizes in the range of 600 sft. to 1800 sft. at affordable cost of Rs 24.00 lakh to Rs 72.00 lakh per apartment. The company’s ongoing projects at Dharmaram Village, Keesara Mandal, Medchal-Malkajgiri District., just 26 kms away from Secunderabad Railway Station and densely populated area with so much of commercial establishments in and around. These projects offer houses to the small income group customers at an affordable cost. This competitive edge, feature of its projects brings landscapes of opportunities for the company’s growth. Further, the company’s ongoing project, commercial venture will provide commercial space at a cost of Rs 32.00 lakh to Rs 64.00 lakh per space ranging from 400 to 800 sft.
Growing demand for agri products: Present trend in increase in consumption by hotels, restaurants, food points, food giants, households, right from street side hotels to 5-star restaurants lends enlarge scope for growth and demand which results into possible scope for the growth of the company.
Risks and concerns
Significant revenue comes from Agro business: The company derives a significant portion of revenue from Agro business and are dependent on the cash flow generated from Agro business for the growth. The company’s Agro business accounted for 100%, 100% and 62.81% of its total revenue from operations for fiscal 2023, fiscal 2022 and fiscal 2021, respectively. Further, Infrastructure business have derived nearly 0%, 0% and 37.19% of its total revenue from operations for fiscal 2023, fiscal 2022 and fiscal 2021, respectively. Consequently, factors that adversely affect the demand for Agro business or its position or reputation may adversely affect business and profitability. The loss of a major customer could lead to a significant decrease in revenue, harm its reputation and reduce its ability to accurately predict cash flow. The risk of such a loss is increased by the fact that the Agro business is an extremely competitive segment in the agriculture industry in India. All of these factors could have an adverse effect on its business, financial condition and results of operations.
Geographical constrain: Currently, the company is carrying its Agro business mainly in the southern region of India, especially in Telangana and Andhra Pradesh and hence its major revenues are generated from operations in these regions only. The company’s sales are majority derived from Agro business in Telangana and Andhra Pradesh. In the event of political discord, economic instability or change in policies of state, natural calamities, riots in the region where its operations are significantly carried as a result its business activities will be affected or gets stopped or if there are any changes in laws applicable to its industry or if any restrictive conditions are imposed on it or its business. Then the company’s financial conditions and operating results may be materially and adversely affected.
Production of certain agricultural commodities are subject to seasonal factors: The business of Viz., Toor Daal, Urad Daal, Moong Daal, Corn / Maize and Paddy in the agricultural produce and commodities are subject to seasonal factors. Toor Daal, Urad Daal, Moong Daal, Corn / Maize and Paddy are the major commodities, in which the company deals and are exposed to seasonal risk. This is due to the fact that majority of the farmers depend on rain for cultivation. Generally, rainfall occurs during Kharif season and hence, the timing and seasonality of rainfall impacts the export operations of the company. Thus, it is subject to seasonal factors, which make its operating results relatively unpredictable. Due to dependency on seasonality of agro crops, results of one reporting period (quarter/half year/year) may not be necessarily comparable with preceding or succeeding reporting periods. The company is impacted by seasonal variations in sales volumes, which may cause its revenues to vary significantly between different quarters in a Fiscal.
Outlook
Sameera Agro and Infra is an infrastructure development and construction company. The company plans, develops, and constructs Residential and commercial spaces, apartments, townships, multistoried complexes, gated communities, landscapes, bridges, flyovers, subways, alleys, industrial parks, laying of water pipelines, gas pipelines, and other related works. The company has a leased manufacturing and processing unit near Hyderabad which is accessible for all the three states viz., Telangana, Karnataka, and Maharashtra. The Company is also in the process of acquiring processing mills on a lease basis at Guntur and Rajahmundry in Andhra Pradesh. On the concern side, the company derives a significant portion of revenue from Agro business. Therefore, factors that adversely affect the demand for such Agro business or its position and reputation may adversely affect business and results of operations. Moreover, majority of its state wise revenues from Agro operations for the last 3 financial years i.e.; March 2023, 2022 and 2021 is dependent majorly on Telangana and Andhra Pradesh. Any loss of business from may adversely affect its revenues and profitability.
The company has come out with an IPO of 34,80,000 equity shares of Rs 10 each at a fixed price of Rs 180 per share to mobilize Rs 62.64 crore. On performance front, the company reported total revenue from operations of Rs 138.82 crore for the year 2022-23 as against Rs 105.34 crore for the financial year 2021-22 which represents growth of 31.78% over the previous financial year. Moreover, the profit after tax for Financial Year 2022-23 has increased from Rs 2.74 crore to 10.04 crore from the previous year, which represents the growth of 266.42% over the previous year, due to better margins on product sales, and improved business opportunities in processing and sale of Agri commodities. Going forward, the company intends to continue to focus on performance and project execution in order to maximize client satisfaction. The company will continue to leverage advanced technologies, designs and project management tools to increase productivity and maximize asset utilization in capital-intensive construction activities. Further, the company intends to maintain a spread of the different types of projects it is involved in as this provides it with a strategy for growth as well as mitigating the risk of focusing on only a certain type of projects and ensures stability of its revenue stream.
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