Bodhi Tree NSE SME IPO review (Avoid)

Review By Dilip Davda on Oct 6, 2020

•    BTML is engaged in entertainment content providing business.
•    Till August 31, 2020, it has a negative net worth.
•    Last seventeen month's super earnings raise concern.
•    Huge outstanding for receivables and payables are major alerts.
•    The issue is priced aggressively compared to its financial performance.

ABOUT COMPANY:
Bodhi Tree Multimedia Ltd. (BTML) is created with the main objects of -" to carry on in India and abroad the business of making of Small or Big Films either for General Public Viewing or Television, TV Serials for any TV Channels in India or abroad either alone or in collaboration with others, Creation, Manufacturing, Consultants etc. of different type of Contents like Text, Audio, Video Content used in all types of communication carriers, develop, create, conceptualize, advise any commercial dissemination of Content/information (Content Films and/or Serials etc.) by various types of modes available now and in future based on Telephone, T.V., Cable, Mobile network and any other types of media available in India or abroad either for itself or for any other client".

BTML is working on a B2B model and provides the content to entertainment channels, websites, digital media in Hindi and other multiple regional languages. Since its inception, it has produces 30+ shows with 1000+ hours' content. BTML's production list includes serials like" Nisha aur Uska Cousin", "Yeh Hai Ashiqui", "Tedhi Medhi Family". "Aapke Aa Janese", "Fear Files", "Marzi", "Raikar Case", "Nati Pinki ki Lambi Love Story" etc.

ISSUE DETAILS/CAPITAL HISTORY:
To meet its plans for working capital (Rs. 2.50 cr.) and general corpus fund (Rs. 0.50 cr.), BTML is coming out with a maiden IPO of 390000 equity shares of Rs.10 each at a fixed price of Rs. 95 per share to mobilize Rs. 3.71 cr. The issue opens for subscription on October 09, 2020, and will close on October 13, 2020. Minimum application is to be made for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge platform.

Issue constitutes 31.20% of the post issue paid-up capital of the company. The company will be spending Rs. 0.71 cr. for this IPO process. This indicates a fully structured model of this issue proceedings.

The issue is solely lead managed by Shreni Shares Pvt. Ltd. while Bigshare Services Pvt. Ltd. is the registrar to the issue. Shreni Shares Pvt. Ltd. is also acting as a Market Maker for this company. Having issued initial equity at par, it allotted on preferential basis 600000 shares at par in August 2020. The company has issued 250000 rights shares at a price of Rs. 100 per share in March 2020.

The average cost of acquisition of shares by the promoters is Rs. 10.00 and Rs. 36.32 per share. Post issue, BTML's current paid-up equity capital of Rs. 0.86 cr. will stand enhanced to Rs. 1.25 cr. With this IPO, the company is looking for a market cap of Rs. 11.88 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last four fiscals, BTML has posted turnover/net profits / - (Loss) of Rs. 11.31 cr. / Rs. - (2.22) cr. (FY17), Rs. 17.29 cr. / Rs. - (3.34) cr. (FY18), Rs. 38.63 cr. / Rs. 0.36 cr. (FY19) and Rs. 27.47 cr. / Rs. 3.66 cr. (FY20). Super profits of FY20 can be attributed to higher other income, inventories and lower employees costs and sustainability of the same trends going forward is a major concern.

On a consolidated basis, for the first five months of the current fiscal, BTML has reported a net profit of Rs. 0.32 cr. on a turnover of Rs. 4.86 cr. As on August 31, 2020, trade receivables and payables outstanding were Rs. 4.65 cr. and Rs. 5.32 cr. that indicates some window dressing in the accounting data.

For the last three fiscals, BTML has posted an average negative EPS and an average negative RoNW.  The issue is priced at a P/BV of 9.83 based on its NAV of Rs. 9.66 as on August 31, 2020, and at P/BV of 2.61 based on post issue NAV of Rs. 36.39., thus the issue appears highly-priced.

If we annualize FY21 earnings and attribute it on fully diluted post issue equity capital, then asking price is at a P/E of around 15.42, making it aggressively priced issue.

COMPARISION WITH LISTED PEERS:
As per offer documents, BTML has shown VR Films, Balaji Tele and BAG Films as its listed peers. They are currently trading at a P/Es of around 5.43, 13.04 and 00 (as on October 06, 2020). However, they are not strictly comparable on an apple to apple basis.

MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's performance front, this is the 3rd mandate from its stable in the last three fiscals (including the ongoing one). Out of the last two listings, one opened at par while the other at a mere premium of 1.95% on the day of listing. Thus the Lead Manager has average track records.


Conclusion / Investment Strategy

BTML has carried forward losses. Last seventeen months performance with super profit and sustainability of the same going forward raises major concern. Company's receivables and payables are exorbitantly high. Currently, this segment is facing tough competition coupled with downturns following COVID-19 pandemic. Post issue equity capital indicates long gestation for migration to the main board. Considering all these, investors may give a "MISS" to this highly-priced offer.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Oct 6, 2020

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 before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

Bodhi Tree Multimedia IPO FAQs

  1. 1. Why Bodhi Tree Multimedia IPO?

    The initial public offer (IPO) of Bodhi Tree Multimedia Ltd offers an early investment opportunity in Bodhi Tree Multimedia Ltd. A stock market investor can buy Bodhi Tree Multimedia IPO shares by applying in IPO before Bodhi Tree Multimedia Ltd shares get listed at the stock exchanges. An investor could invest in Bodhi Tree Multimedia IPO for short term listing gain or a long term.

  2. 2. How is Bodhi Tree Multimedia IPO?

    Read the Bodhi Tree Multimedia IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Bodhi Tree Multimedia IPO what should investors do?

    Bodhi Tree Multimedia IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Bodhi Tree Multimedia IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Bodhi Tree Multimedia IPO good?

    Our recommendation for Bodhi Tree Multimedia IPO is to avoid.

  5. 5. Is Bodhi Tree Multimedia IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Bodhi Tree Multimedia IPO.

  6. 6. When will Bodhi Tree Multimedia IPO allotment status?

    The Bodhi Tree Multimedia IPO allotment status will be available on or around Oct 16, 2020. The allotted shares will be credited in demat account by Oct 13, 2020. Visit Bodhi Tree Multimedia IPO allotment status to check.

  7. 7. When will Bodhi Tree Multimedia IPO list?

    The Bodhi Tree Multimedia IPO will list on Wednesday, October 21, 2020, at NSE SME.








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