Kids Medical Systems Ltd. (KMS) is engaged in providing solution in healthcare sector as pediatric clinic chain provider. It offers exclusive services which can benefit the child for their healthcare needs. it partner with doctors at a clinic /premise level. KMS offers services which can assist and help doctors to manage, educate and develop their clinic, its infrastructure, its people and most importantly also provide guidance in services to parents of the child. The company also assists in all services like timely reminders on vaccinations and other services are offered to parents proactively as it understand a proper communication, and better service standards offered at the time of distress where immediate child healthcare services are required. KMS provides the service Management/Light Asset Model which includes the clinic Management Software, clinic reports, Training, recruitment of staff, Online and Offline engagement with customers. In addition it also provide Glow sign Boards, Paraphernalia, Standees and also arrange for co-branding marketing efforts, as and when required in Pre-School, Schools, mailers, SMS, whatsApp or other electronic or through other devices or modes. KMS started with 1(one) clinic in Dombivali (Thane District- Maharastra) and reached to 15 (Fifteen) Hospitals/Doctors with whom it entered into Management Partnership/ Franchisee agreements/Revenue sharing arrangement till date.
To part finance setting up of clinics and purchase of its interiors with allied infrastructure, working capital and general corpus fund needs, KMS is coming out with a maiden IPO of 2000000 equity shares of Rs. 10 each at a fixed price of Rs. 30 per share to mobilize Rs. 6.00 crore. Issue opens for subscription on 11.12.17 and will close on 14.12.17. Minimum application is to be made for 4000 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 28.20% of the post issue paid up capital of the company. The average cost of acquisition of shares by the promoters is ranging from Rs. 1.86 to Rs. 9.77 per share. Having issued equity at par on MoA, it raised further equity in the price range of Rs.330 to Rs. 12500 per share between November 2015 and August 2017, and has also issued bonus shares in the ratio of 30 for 1 in September 2017. Post issue, its current paid up equity capital of Rs. 5.09 crore will stand enhanced to Rs. 7.09 crore.
On performance front, KMS has posted turnover/net profits of Rs. 0.24 cr. / Rs. – (0.41) cr. (FY14), Rs. 0.59 cr. / Rs. – (0.79) cr. (FY15), Rs. 0.96 cr./ Rs. – (1.11) cr. (FY16) and Rs. 2.26 cr. / Rs. 0.14 cr. (FY17). Thus FY 17 witnessed surprising results. For the period ended on 05.09.17 of the current fiscal, it has earned net profit of Rs. 0.03 cr. on a turnover of Rs.0.32 cr. Issue is priced at a P/BV of 2.81 and 1.86 on the basis of its NAV as on 05.09.17 as well as post issue. For last three fiscals it has posted an average EPS of Rs. - (0.87) and average RoNW of – (0.84) %. If we annualize latest earnings and attribute on fully diluted equity post issue, then asking price is at a P/E of 31 plus, thus issue is aggressively priced. It has not listed peers to compare with.
On merchant banker’s front, this is the 10th 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).
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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