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Diggi Multitrade BSE SME IPO review (Avoid)

Diggi Multitrade Ltd. (DML) – (erstwhile known as Diggi Securities Pvt. Ltd.) was initially engaged in securities trading in stock markets. In 2013-14 it forayed into trading of fabrics, real estate, allied activities and construction material and changed its name.

To part finance its incremental working capital and general corpus fund needs DML is coming out with a maiden IPO of 2600000 equity shares of Rs. 10 each at a fixed price of Rs. 13 per share to mobilize Rs. 3.38 crore. Issue opens for subscription on 11.12.17 and will close on 14.12.17. Minimum application is to be made for 10000 shares and in multiples thereon, thereafter. Post allotment shares will be listed on BSE SME. Issue is solely lead managed by Gretex Corporate Services Pvt Ltd and Purva Sharegistry (India) Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.87% of the post issue paid up capital of the company. The average cost of acquisition of shares by the promoters is Rs. 10. It has issued entire equity at par so far. Post issue, its current paid up equity capital of Rs. 7.08 crore will stand enhanced to Rs. 9.68 crore.

On performance front, DML has posted turnover/net profits of Rs. 0.60 cr. / Rs. 0.02 cr. (FY14), Rs. 2.07 cr. / Rs.0.03 cr. (FY15), Rs. 1.00 cr./ Rs. – (0.03) cr. (FY16) and Rs. 1.88 cr. / Rs. 0.06 cr. (FY17). Surprisingly, for the first half of current fiscal it has earned net profit of Rs. 0.24 cr. on a turnover of Rs. 1.83 cr. Issue is priced at a P/BV of 1.24 and 1.17 on the basis of its NAV as on 30.09.17 as well as post issue. For last three fiscals it has posted an average EPS of Rs.0.05 and average RoNW of 0.39%. If we annualize latest earnings and attribute on fully diluted equity post issue, then asking price is at a P/E of 26 thus issue is aggressively priced. It has not listed peers to compare with.

On merchant banker’s front, this is the 9th mandate from its stable in past three years. Out of last 8 listings 3 opened at discount, 4 at par and 1 with just 0.40% premium to offer price on the day of listings. Thus it has poor track record.

Conclusion: There is no harm in giving this highly priced issue a miss. (Avoid).

Conclusion / Investment Strategy

There is no harm in giving this highly priced issue a miss. (Avoid).

Review Posted On: Dec 7, 2017

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

About Dilip Davda

Dilip Davda (SEBI registered Research Analyst-Mumbai), a freelance journalist for more than 25 years, is a stock market analyst and news article writer. Since 1985, he has contributed to print media, electronic media and often appears on TV channels as visiting stock analyst. His articles are regularly publishes in Smart Investment (English and Gujarati weekly published from Ahmedabad), Free Press Journal and many other news papers & magazines. He is also a visiting stock analyst on DD News TV Channel.



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