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Bombay Metrics NSE SME IPO review (May apply)

Review By Dilip Davda on Sep 28, 2021

•    BMSCL is in supply chain management services.
•    The company is getting major work from a single customer.
•    It has posted growing top lines for the last four fiscals. 
•    It suffered minor setbacks in FY21 bottom lines following the pandemic.
•    Issue is reasonably priced, but dependency on a single customer raises concern.

ABOUT COMPANY:
Bombay Metrics Supply Chain Ltd. (BMSCL) is a full-service provider of the manufacturing of engineered goods and supply chain management services. It also offers efficient services in advanced engineering, 3D scanning, rapid prototyping, flow simulation, project management and quality management. The company's primary focus is to benefit from the "Make in India" initiative by the Government of India by aiding in developing supplier capabilities in India.

BMSCL helps customers find the right manufacturing source in India for their products and ensure optimal execution and quality by working with qualified and ISO-certified suppliers. It oversees the operations, manages the supply chain process and chooses the right logistics partners to be close to ports connecting its customer locations. The company helps customers understand the benefits and savings of global manufacturing by helping many OEMs and Tier 1 customers manage their entire manufacturing and supply chain processes. As of August 31, 2021, it had total manpower of 31 on its roll including key management. Since the last three fiscals, its 90%+ revenue comes from a major customer MES, Inc. 

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its needs for working capital (Rs. 3.44 cr.), general corporate purpose (Rs. 0.43 cr.), BMSCL is coming out with a maiden IPO of 460800 equity shares of Rs. 10 each at a fixed price of Rs. 93 per share to mobilize Rs. 4.29 cr. The issue opens for subscription on September 30, 2021, and will close on October 04, 2021. Minimum application is to be made for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes xx% of the post issue paid-up capital of the company. BMSCL will spend around Rs. 0.42 cr. for this IPO process. 

The issue is solely lead managed by Unistone Capital Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Rikhav Securities Ltd. is the market maker for this issue. 

The company has raised entire equity capital at par so far and has also issued bonus shares in the ratio of 75 for 1 in March 2021. The average cost of acquisition of shares by the promoters is Rs. 0.13 and Rs. 0.99 per share. 

Post issue, BMSCL's current paid-up capital of Rs. 1.08 cr. will stand enhanced to Rs. 1.54 cr. (1539240 shares). Based on the IPO pricing, the company is looking for a market cap of Rs. 14.32 cr. 

FINANCIAL PERFORMANCE: 
On the financial performance front, for the last four fiscals, the company has posted turnover/net profits of Rs. 7.64 cr. / Rs. 0.44 cr. (FY18), Rs. 20.03 cr. / Rs. 0.93 cr. (FY19), Rs. 29.93 cr. / Rs. 1.39 cr. (FY20) and Rs. 32.41 cr. / Rs. 1.30 cr. (FY21). It suffered a minor setback in FY21 of the fallout of the pandemic.

For the last three fiscals, BMSCL has reported an average EPS of Rs. 11.84 and an average RoNW of 56.12%. The issue is priced at a P/BV of 2.4 based on its NAV of Rs. 38.75 as of March 31, 2021, and at a P/BV of 1.69 based on its post-issue NAV of Rs. 54.88. 

If we attribute FY21 earnings on fully diluted post issue equity capital, then the asking price is at a P/E of around 11.02. Thus the issue is reasonably priced. 

COMPARISON WITH LISTED PEERS:
As per offer documents, BMSCL has no listed peers to compare with.

DIVIDEND POLICY:
The company announced a dividend of 200% for FY20 which was paid during FY21. Thereafter no dividend is declared. It will adopt a product dividend policy based on its financial performance and future prospects. 

MERCHANT BANKER'S TRACK RECORD:
This is the 5th mandate from Unistone Capital in the last four fiscals (including the ongoing one). Out of the last four listings, 1 opened at discount and the rest with premiums ranging from 0.4% to 13.83% on the day of listing. 


Conclusion / Investment Strategy

Based on the financial parameters, the issue appears reasonably priced. The only major concern is the lion share of orders from only one customer. If anything goes wrong with this customer, the company will be in the doldrums. Its future prospects hinge on the addition of new customers. Considering this, only cash surplus/risk seekers may consider moderate investment for the medium term.

Review By Dilip Davda on Sep 28, 2021

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

Bombay Metrics Supply Chain IPO FAQs

  1. 1. Why Bombay Metrics Supply Chain IPO?

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

  2. 2. How is Bombay Metrics Supply Chain IPO?

    Read the Bombay Metrics Supply Chain IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Bombay Metrics Supply Chain IPO what should investors do?

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

  4. 4. Is Bombay Metrics Supply Chain IPO good?

    Our recommendation for Bombay Metrics Supply Chain IPO is to subscribe for long term.

  5. 5. Is Bombay Metrics Supply Chain IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Bombay Metrics Supply Chain IPO.

  6. 6. When will Bombay Metrics Supply Chain IPO allotment status?

    The Bombay Metrics Supply Chain IPO allotment status will be available on or around Oct 7, 2021. The allotted shares will be credited in demat account by Oct 11, 2021. Visit Bombay Metrics Supply Chain IPO allotment status to check.

  7. 7. When will Bombay Metrics Supply Chain IPO list?

    The Bombay Metrics Supply Chain IPO will list on Tuesday, October 12, 2021, at NSE SME.

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