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DJ Mediaprint BSE SME IPO review (Subscribe for Long Term)

Review By Dilip Davda on Mar 19, 2020

•    DJML is in printing and logistic services segment.
•    Its financial performance indicates a growth pattern.
•    It operates in highly competitive and fragmented segments.
•    LM has poor track records.
•    Based on the latest financial performance, the issue appears reasonably priced.

ABOUT COMPANY:
DJ Mediaprint & Logistics Ltd. (DJML) is a provider of Integrated Printing, Logistics and Courier solutions in India and overseas with well-networked transport operations, pre-eminent quality standards and processes & operations. It also provides Bulk Mailing, Speed Post, Records Management, Manpower Supply, Return of Post Management, Bulk Scanning, Moving, Newspaper Print Advertising services and other related services. DJML currently has several offices spread across Mumbai, Navi Mumbai & Bhiwandi (Thane), one in Delhi and one in Goa, where it is supported by a well-connected network across the city.

DJML caters to a wide customer base across various industry segments such as Banking, Airlines, Shipping, Logistics, Education, Finance, Lottery Ticket, Healthcare, Insurance, Manufacturing, Retail, Stockbroking, Telecom, Utilities among others. As per offer documents, some of its clients are LIC, National Insurance, Bharti Axa, GIC Housing Finance, Citi Bank, Bank of India, Union Bank of India, Corporation Bank, Federal Bank, Bank of India, State Bank of India, Punjab National Bank, Infosys, Wipro, Britannia, Aditya Birla Group, Indian Institute of Architects, Dish TV, Philips, Larson & Turbo, NSDL among others.

The company has executed many short term/long terms contracts for Printing & Dispatch of monthly Credit Cards Statement, Letter, Annual Reports & Other ancillary services, Storage of records and its management, Digital franking machines services and ancillary services etc. with its clients. The company operates in a highly competitive and fragmented industry and that's the main concern.

ISSUE DETAILS/CAPITAL HISTORY:
To meet its working capital (Rs. 1.90 cr.) and general corpus fund (Rs. 0.15 cr.) needs, DJML is coming out with a maiden IPO of 1200000 equity shares of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 2.40 cr. The issue opens for subscription on 26.03.20 and will close on 31.03.20. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 28.48% of the post-issue capital of the company. DJML is spending Rs. 0.35 cr. for this IPO process.

The issue is solely lead managed by Finshore Management Services Ltd. and Purva Sharegistry (India) Pvt. Ltd. is the registrar to the issue. Nikunj Stock Brokers Ltd. is acting as a market maker for this IPO.

Having issued entire equity at par, DJML has also issued bonus shares in the ratio of 5 shares for every 1 share held in February 2020. The average cost of acquisition of shares by the promoters is Rs. 1.67 per share. Post issue, the company's current paid-up equity capital of Rs. 3.01 cr. will stand enhanced to Rs. 4.21 cr. With this IPO company is looking for a market cap of Rs. 8.43 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, DJML has posted turnover/net profits of Rs. 10.11 cr. / Rs. 0.29 cr. (FY17), Rs. 17.34 cr. / Rs. 0.65 cr. (FY18) and Rs. 20.67 cr. / Rs. 0.92 cr. (FY19). For the first nine months of FY20, it has earned net profit of Rs. 0.75 a cr. on a turnover of Rs. 13.12 cr.

For the last three fiscals, DJML has posted an average EPS of Rs. 2.41 and an average RoNW of 29.54%. The issue is priced at a P/BV of 1.62 based on its NAV of Rs.12.36 as on 31.12.19 and at a P/BV of 1.38 based on post issue NAV of Rs. 14.53.

If we annualize latest earnings and attribute it on fully diluted post issue equity then asking price is at a P/E of around 8.5, thus IPO appears reasonably priced.

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

MERCHANT BANKER'S TRACK RECORD:
On merchant banker's front, this is the 16th mandate from its stable. Out of last 10 listings, 2 opened at discount, 1 at par and the rest with premiums ranging from xx% to xx% on the day of listing. Alumilite Architectural IPO handled by this merchant banker was surprisingly withdrawn after closure with a full subscription.


Conclusion / Investment Strategy

Its financial data showing growth trends since FY17. Based on the latest earnings IPO appears reasonably priced. DJML is operating in a highly competitive and fragmented segment and raises concern. LM has poor track records. Considering the current market scenario, investors may consider investment for the long term.

Reviewer recommends Subscribing to the issue for Long Term.

Review By Dilip Davda on Mar 19, 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 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

DJ Mediaprint IPO FAQs

  1. 1. Why DJ Mediaprint IPO?

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

  2. 2. How is DJ Mediaprint IPO?

    Read the DJ Mediaprint IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. DJ Mediaprint IPO what should investors do?

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

  4. 4. Is DJ Mediaprint IPO good?

    Our recommendation for DJ Mediaprint IPO is to subscribe for long term.

  5. 5. Is DJ Mediaprint IPO worth Investing?

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

  6. 6. When will DJ Mediaprint IPO allotment status?

    The DJ Mediaprint IPO allotment status will be available on or around Apr 7, 2020. The allotted shares will be credited in demat account by Apr 9, 2020. Visit DJ Mediaprint IPO allotment status to check.

  7. 7. When will DJ Mediaprint IPO list?

    The DJ Mediaprint IPO will list on Monday, April 13, 2020, at BSE SME.

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