City Pulse BSE SME IPO review (Others)

Review By Dilip Davda on Jun 24, 2019

  • CPML is a regional player in miniplex/multiplexes.
  • Based on the scale of working, the issue is fully priced.
  • Trying a novel concept of "World on Wheels" which appears more critical.
  • This issue is the first mandate from Lead Manager, hence no track record.

 
ABOUT COMPANY:
City Pulse Multiplex Ltd. (CPML) is engaged in the business of operating and managing of miniplex/multiplexes. Its portfolio comprises film exhibition, film production and film distribution. Currently, it has 14 screens with a seating capacity of 3340 in the Gujarat region. It operates all these screens under the brand name "WOW Cine Pulse". Most of its miniplex has a seating capacity of around 100 seats. In the year 2006, it launched its first film "Love is Blind – Ek Gujarati Prem Katha" and the second one "Devi Pujak ni Dekri" in 2011.
 
The operational units are situated at key locations which offer a large catchment area.  These operational units are surrounded by malls, food courts and restaurants along with adequate car parking facilities thus making them attractive destinations for patrons.  CPML is proposing to launch the new project i.e. "World on Wheel" i.e. first of its kind of cinema on wheels with all the miniplex/multiples amenities within it.
 
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans for setting up new miniplex/multiplex  (Rs. 2.71 cr.) and general corpus funds  (Rs. 0.75 cr.), CPML is coming out with a maiden IPO of 1328000 equity shares of Rs. 10 each at a fixed price of Rs. 30 per share to mobilize Rs. 3.98 cr. The issue opens for subscription on 27.06.19 and will close on 03.07.19. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 40.02% of the post issue paid up capital of the company. CPML is spending Rs. 0.52 cr. for the issue process.
 
The issue is solely lead managed by Capital Square Advisors Pvt. Ltd. while Link Intime India  Pvt. Ltd. is the registrar to the issue.  Vijeta Broking India Pvt. Ltd. is acting as a Market Maker for this issue.
 
Having issued initial equity at par, CPML has issued further equity in the price range of Rs. 20and Rs. 30 per share between September 2018 and February 2019. It has also issued bonus shares in the ratio of 0.9 share for every 1 share held in April 2019. The average cost of acquisition of shares by the promoters is Rs. 10.24 and Rs. 12.84 per share. Post issue CPML's current paid up equity capital of Rs. 1.99  cr. will stand enhanced to Rs. 3.32  cr.
 
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, CPML has posted turnover/net profits of Rs. 0.24 cr. / Rs. 0.10  cr. (FY17), Rs. 0.74 cr. / Rs. 0.26 cr. (FY18) and Rs. 3.09 cr. / Rs. 0.59 cr. (FY19). 
For the last three fiscals, it has posted an average EPS of Rs. 2.97 and an average RoNW of –(0.06%). The issue is priced at a P/BV of 1.32 on the basis of its NAV of Rs. 22.71 as on 31.03.19 and at a P/BV of 1.56 on the basis of post issue NAV of Rs. 19.18.
 
If we attribute the latest earnings on a fully diluted equity post issue, then asking price is at a P/E of around 17. Thus the issue appears fully priced.
 
COMPARE WITH LISTED PEERS:
As per offer documents, CPML has shown Inox Leisure and PVR as its listed peers that are currently trading at a P/Es of around 24 and 43 (as on 24.06.19). However, they are not comparable on an apple to apple basis.
  
MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's front, this is the 1st mandate from its stable in the two fiscals. Hence no listing day track records for previous mandates.


Conclusion / Investment Strategy

CPML is a regional player in a highly competitive market with nationwide players like Inox, PVR, Cinepolis etc. Based on the scale of working, the issue is fully priced. Cash surplus risk savvy investors may consider investment at their own risk.

Review By Dilip Davda on Jun 24, 2019

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. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. 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, a freelance journalist

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

City Pulse IPO FAQs

  1. 1. Why City Pulse IPO?

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

  2. 2. How is City Pulse IPO?

    Read the City Pulse IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. City Pulse IPO what should investors do?

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

  4. 4. Is City Pulse IPO good?

    Sorry, we didn't rate the City Pulse IPO.

  5. 5. Is City Pulse IPO worth Investing?

    Our lead analyst Mr. Dilip Davda didn't rate the City Pulse IPO.

  6. 6. When will City Pulse IPO allotment status?

    The City Pulse IPO allotment status will be available on or around Jul 8, 2019. The allotted shares will be credited in demat account by Jul 9, 2019. Visit City Pulse IPO allotment status to check.

  7. 7. When will City Pulse IPO list?

    The City Pulse IPO will list on Thursday, July 11, 2019, at BSE SME.

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