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Cyber Media Reseach NSE SME IPO review (Avoid)

Review By Dilip Davda on Sep 22, 2022

•    CMRSL is engaged in ad tech and data analytics business.
•    Post the pandemic, this segment has marked growth and is poised for better prospects.
•    Based on FY22 results, the issue is priced aggressively. 
•    Its listed parent company is languishing with poor track records.
•    There is no harm in skipping this pricy issue. 

PREFACE:
This is a group company of already listed parent company Cyber Media India Ltd., which has been languishing with average performance and has skipped dividends from 2008 onwards. The group is engaged in a similar business in many subsidiaries and there are chances of a clash of interests. This company posted bumper working for FY22 and based on it, the issue is priced aggressively. 

ABOUT COMPANY:
Cyber Media Research & Services Ltd. (CMRSL) is engaged in ad tech and data analytics business in an industry that is expanding rapidly. The Company has four revenue streams i.e., Digital Marketing, Programmatic Media Buying, Publisher Monetization, and Data Analytics. These together form the pillars of the digital marketing landscape, i.e. it provides proprietary solutions that enable advertisers and publishers to match the right ad with the right user. This drives higher conversions and sales for advertisers and enables publishers to earn more.

The Company has been growing its offerings and customer base and is well positioned to build multiple revenue streams in the digital landscape. Automation in this industry is driving significant changes, and data acts as a critical enabler. Its algorithms leverage large sets of data and process it via AI engines to provide the right results, therefore simplifying digital marketing. CMGalaxy, Auxo Ads, and CyberAds are CMRSL's propriety products for different stakeholders in the ecosystem. As of March 31, 2022, the Company has 48 employees on the payroll. 

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its need for working capital (Rs. 4.00 cr.), funding for new projects, and general corporate purposes, CMRSL is coming out with a maiden IPO of 780000 equity shares of Rs. 10 each via book building route with a price band of Rs. 171.00 to Rs. 180.00 per share to mobilize Rs. 14.04 cr. (at the upper cap). The issue consists of 408000 fresh equity shares and 372000 shares by Offer for Sale (OFS). The issue opens for subscription on September 27, 2022, and will close on September 29, 2022. The minimum application is to be made for 800 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.64% of the post-issue paid-up capital of the company. 

The issue is solely lead managed by Swastika Investmart Ltd and Link Intime India Pvt. Ltd. is the registrar to the issue. Sunflower Broking Pvt. Ltd. is the market maker for this IPO. 

The company has issued/converted entire equity shares at par so far. It has also issued bonus shares in the ratio of 5 for 1 in September 2018 and 9 for 5 in February 2022. The average cost of acquisition of shares by the promoters is Rs. 1.31 and Rs. 64.91 (?) per share. There appears to be some mismatch in the cost of acquisition of shares by the promoters. 

Post-IPO, CMRSL's current paid-up equity capital of Rs. 2.52 cr. will stand enhanced to Rs. 2.93 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 52.70 cr. (at the upper cap). 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last four fiscals, CMRSL has (on a consolidated basis) posted a turnover/net profit of Rs. 38.70 cr. / Rs. 0.27 cr. (FY19), Rs. 30.47 cr. / Rs. 0.08 cr. (FY20), Rs. 30.16 cr. / Rs. 0.66 cr. (FY21), and Rs. 56.78 cr. / Rs. 1.51 cr. (FY22). Bumper results for the pre-IPO year appear to be a window dressing. However, the management claims that due to higher margin jobs done by it resulted in better earnings. 

For the last three fiscals, CMRSL has (on a consolidated basis) reported an average EPS of Rs. 3.36 and an average RoNW of 28.01 %. The issue is priced at a P/BV of 12.37 based on its NAV of Rs. 14.55 as of March 31, 2022, and at a P/BV of 4.79 based on its post-IPO NAV of Rs. 37.61 per share (at the upper cap). 

If we attribute FY22 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 34.95. 

DIVIDEND POLICY:
The company has not declared/paid any dividend for the last five fiscals. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

COMPARISON WITH LISTED PEERS:
As per offer documents, CMRSL has shown Affle India, Brightcom Group, and Vertoz Advertising as their listed peers. They are currently trading at a P/E of 323.83, 00, and 39.34 (as of September 2022). However, they are not truly comparable on an apple-to-apple basis.  

MERCHANT BANKER'S TRACK RECORD:
This is the fourth mandate from Swastika Investmart in the last four fiscals (including the ongoing one). Out of the last three listings, 1 opened at discount, 1 at par, and 1 at a premium of 4.17%. Thus it has marked a poor track record.


Conclusion / Investment Strategy

The group has similar activities in its many subsidiaries. The parent company Cyber Media India is languishing with average performance and no dividends since 2008. This company (CMRSL) has priced its IPO very aggressively with super results for FY22. The sustainability of such performance going forward raises concern. A small equity base post IPO indicates longer gestation for migration to the main board. There is no harm in skipping this pricy issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 22, 2022

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

Cyber Media Research IPO FAQs

  1. 1. Why Cyber Media Research IPO?

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

  2. 2. How is Cyber Media Research IPO?

    Read the Cyber Media Research IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Cyber Media Research IPO what should investors do?

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

  4. 4. Is Cyber Media Research IPO good?

    Our recommendation for Cyber Media Research IPO is to avoid.

  5. 5. Is Cyber Media Research IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Cyber Media Research IPO.

  6. 6. When will Cyber Media Research IPO allotment status?

    The Cyber Media Research IPO allotment status will be available on or around Oct 4, 2022. The allotted shares will be credited in demat account by Oct 7, 2022. Visit Cyber Media Research IPO allotment status to check.

  7. 7. When will Cyber Media Research IPO list?

    The Cyber Media Research IPO list date is not yet available. The Cyber Media Research IPO is planned to list on Oct 10, 2022, at NSE SME.

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