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Crayons Advertising NSE SME IPO review (May apply)

Review By Dilip Davda on May 19, 2023

•    CAL is an integrated marketing and communication agency.
•    After average performance till FY22, it marked superb performance. 
•    Based on the inflated profits for 9M-FY23, the issue appears lucratively priced.
•    The sustainability of super margins going forward is a major concern.
•    Well-informed investors may park funds for medium-term rewards.

Crayons Advertising Ltd. (CAL) is an Integrated marketing and communications agency, that provides 360-degree solutions to its wide array of clients. The company was incorporated by the founder and Chairman Mr. Kunal Lalani with an object and vision to provide advertising solutions. The company is in the same industry for the past 36 years and is continuously expanding its business horizons with the moving trends across the world, reflecting its growing expertise in the marketing and advertising industry.

The wide area of scope of work being offered and provided by Crayons to its clients make it one of the few agencies that can truly claim to be a fully integrated and independent in providing marketing and communications solutions. It offers world-class creative, exceptional brand marketing strategy, pragmatic online & offline media planning & buying, cutting-edge digital expertise, on-ground & virtual activation capabilities, and design solutions that help its clients in brand building. 

It provides a high-end ecosystem and end-to-end ad-tech communication solutions platform for advertising media services consisting of Brand Strategy, Events, Digital Media, Print Media, and Outdoor (OOH) Media services which cover advertisement modes such as Newspapers, Brochures, Magazines, Television Channels, FM channels and display of Outdoor Hoardings, etc. 

With an aim to retain clients, the company provide an apt solution to the marketing needs of the clients. It can understand the various media (advertising modes) available and how to use the right mix of media per client's objectives. Therefore, Crayons' growth and expansion are clearly visible through the fact that the company is now operating through 5 (five) offices located in New Delhi, Mumbai, Chennai, Kolkata, and Lucknow. As of the said date, it has 188 employees on its payroll. 

Its marquee client list includes Kajaria Ply, LIC, Air India, Kohinoor Foods, Casio, Delhi Police, SBI, Korea Tourism, APL Apollo, etc. 

The company is coming out with a maiden IPO of 6430000 equity shares of Rs. 10 each via a book-building process to mobilize Rs. 41.80 cr. at the upper cap. It has announced a price band of Rs. 62 - Rs. 65 per share. The issue opens for subscription on May 22, 2023, and will close on May 25, 2023. The minimum application to be made is for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.32% of the post-IPO paid-up equity capital of the company. From the net proceeds of the IPO money, it will utilize Rs. 14.52 cr. for working capital, Rs. 15.30 cr. for capex on infrastructure and cutting-edge technology for expansion, and the rest for general corporate purposes. 

The net issue excluding the Market Maker portion (322000 shares i.e. 5%) is allocated as not more than 50% for QIBs, not less than 15% for HNIs, and not less than 35% for Retail investors. 

Corporate Capital Ventures Pvt. Ltd. is the sole lead manager, Skyline Financial Services Pvt. Ltd. is the registrar of the issue and SS Corporate Securities Ltd. is the market maker for the company. 

CAL has issued its entire equity capital at a par value so far and has also issued bonus shares in the ratio of 1 for 1 in September 1996, and 7 for 1 in December 2022.  The average cost of acquisition of shares by the promoters is Rs. 0.81, Rs. 1.25, and Rs. 1.35 per share. 

Post-IPO, CAL's current paid-up equity capital of Rs. 18.00 cr. will stand enhanced to Rs. 24.43 cr. Based on the upper cap of the IPO price, the company is looking for a market cap of Rs. 158.80 cr. 

On the financial performance front, for the last three fiscals, CAL has posted a total revenue / net profit of Rs.163.68 cr. / Rs. 1.17 cr. (FY20), Rs. 106.61 cr. / Rs. 0.13 cr. (FY21), and Rs. 194.05 cr. / Rs. 1.61 cr. (FY22). For 9M of FY23, it earned a net profit of Rs. 12.67 cr. on total revenue of Rs. 203.75 cr. Thus the bumper profit for 9M-FY23 raised eyebrows and concern over sustainability. 

For the last three fiscals, CAL has reported an average EPS of Rs. 0.58 and an average RoNW of 2.82%. The issue is priced at a P/BV of 2.34 based on its NAV of Rs. 27.73 as of December 31, 2022, and at a P/BV of 1.73 based on its post-IPO NAV of Rs.37.54 per share (at the upper cap). Till this morning (i.e. 20.05.23) CAL's own website is missing its financial track records and Annual Reports. 

If we annualize its super earnings of 9M FY23 and attribute it to post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 9.39 making it a lucratively priced offer with perhaps inflated profits in a pre-IPO year differing from its historical trends, but based on its FY22 earnings, it is at a P/E of 98.48 and making it an aggressively priced one. 
The company has not declared any dividends for any financial year. It will adopt a prudent dividend policy post-listing, based on its financial performance and future prospects. 

As per the offer document, the company has shown Affle (India), Vertoz Advertising, and Pressman Advertising as their listed peers. They are currently trading at a P/E of 182.35, 79.41, and 49.35 (as of May 19, 2023). However, they are not truly comparable on an apple-to-apple basis. 

This is the 14th mandate from Corporate Capital Ventures in the last eight fiscals (including the ongoing one). Out of the last 10 listings, 3 opened at discount and the rest listed at premiums ranging from 0.61% to 231.63% on the listing date.

Conclusion / Investment Strategy

The company posted average historical trends in its financial performance till FY22 and marked a sudden boost in its bottom line for 9M FY23 – a pre-IPO year. This not only raises eyebrows but concerns over sustainability in the future. Considering historic trends, the issue is aggressively priced while it appears lucratively priced on boosted earnings. Hence well-informed investors may consider parking funds for the medium term.

Review By Dilip Davda on May 19, 2023

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. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. 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 their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.

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.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

Crayons Advertising IPO FAQs

  1. 1. Why Crayons Advertising IPO?

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

  2. 2. How is Crayons Advertising IPO?

    Read the Crayons Advertising IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Crayons Advertising IPO what should investors do?

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

  4. 4. Is Crayons Advertising IPO good?

    Our recommendation for Crayons Advertising IPO is to subscribe for long term.

  5. 5. Is Crayons Advertising IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Crayons Advertising IPO.

  6. 6. When will Crayons Advertising IPO allotment status?

    The Crayons Advertising IPO allotment status will be available on or around May 30, 2023. The allotted shares will be credited in demat account by June 1, 2023. Visit Crayons Advertising IPO allotment status to check.

  7. 7. When will Crayons Advertising IPO list?

    The Crayons Advertising IPO will list on Friday, June 2, 2023, at NSE SME.


1. Ashok gohel     Link|May 21, 2023 1:39:29 PM
I think think ipo listed very high price and good return.i am comen man and simply small invester.this is only my Hartley filling.bhart mata ki jay .Jay somnath.