Chittorgarh.com Logo
Loading...

Getalong Enterprise BSE SME IPO review (Avoid)

Review By Dilip Davda on Sep 23, 2021

•    GEL is in the trading business with a variety of product portfolios.
•    So far it has just about 12 months working overall.
•    Post issue paid-up equity indicates longer gestation for migration to the mainboard.
•    The issue is fully structured based on its issue expenses.

ABOUT COMPANY: 
Getalong Enterprise Ltd. (GEL) is mainly engaged in the trading business. Its product portfolio is diversified with operating in three key segments i.e. export of textiles, trading in Gold Bullion and sale of female care products. It also provides other services. It is operating in highly competitive segments. The company was incorporated in July 2020 and started its business. The company does not have any long term contracts for procurement or supply of inputs and does trading on the basis of purchase orders from customers. Its revenue includes about 56% from exports of products. Its top 10 customers contributed 72.55% of the total revenues. It operates from a rented office and does not own and is doing largely third party business. It has entered into an agreement for 2 years only for its rented office.  

As on the filing of the prospectus, it has 9 employees including directors and KMPs. 

ISSUE DETAILS/CAPITAL HISTORY: 
To part finance its needs for working capital (Rs. 3.90 cr.) and general corporate purpose (Rs. 0.75 cr.), GEL is coming out with a maiden IPO of 750000 equity shares of Rs. 10 each at a fixed price of Rs. 69 per share to mobilize Rs. 5.18 cr. The issue opens for subscription on September 27, 2021, and will close on September 30, 2021. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 41.02% of the post issue paid-up capital of GEL. The company will be spending Rs. 0.53 cr. for this IPO process. Based on issue expenses, the company has already structured IPO funding.

The issue is solely lead managed by Shreni Shares Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Shreni Shares Pvt. Ltd. is also the market maker for this issue. 

Having issued initial equity at par, the company raised further equity at the price of Rs. 70 per share between January 2021, and February 2021, and has also issued bonus shares in the ratio of 3 for 1 in February 2021. The average cost of acquisition of shares by the promoters is Rs. 14.73 and Rs. 17.50 per share. 

Post issue, GEL's current paid-up equity capital of Rs. 1.08 cr., will stand enhanced to Rs. 1.83 cr. Based on the issue pricing, the company is looking for a market cap of Rs. 12.62 cr. 

FINANCIAL PERFORMANCE: 
On the financial performance front, GEL has posted a net profit of Rs. 0.86 cr. on a turnover of Rs. 66.50 cr. for FY21. For the first four months of FY22 ended on July 31, 2021, it has earned a net profit of Rs. 1.08 cr. on a turnover of Rs. 17.06 cr. Thus super-profits in the pre-IPO period raise concern. 

The company has posted an EPS of Rs. 7.97 and RoNW of 32.63% for FY21. The issue is priced at a P/BV of 2.83 based on its NAV of Rs. 24.42 as of March 31, 2021, and at a P/BV of 4.79 based on its post-issue NAV of Rs. 14.40.

If we annualized super earnings for FY22 and attribute it to fully diluted post issue equity then the asking price is at a P/E of 3.90, and based on FY 21 earnings then P/E stands at 14.68. 

DIVIDEND POLICY:
The company has not declared any dividend so far. Post listing, it will adopt a prudent dividend policy based on its earnings and future prospects. 

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

MERCHANT BANKER'S TRACK RECORDS:
This is the 6th mandate from Shreni Shares Pvt. Ltd. in the last three fiscals (including the ongoing one). Out of the last 5 listings. 2 opened at par and the rest with premiums ranging from 0.67% to 1.95% on the day of listings. Thus it has an average track record.


Conclusion / Investment Strategy

The company operates from rented premises and posed for higher risk of unwarranted situations. Post-IPO, its paid-up equity base indicates longer gestation for migration to the mainboard. Even the issue expenses hint at a fully structured IPO with funding arrangements. Though it appears attractively priced based on super earnings, the sustainability of such earnings in highly competitive fields raises concern. Currently, it has just 9 employees including the management. Considering all these, there is no harm in ignoring this issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 23, 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

Getalong Enterprise Limited IPO FAQs

  1. 1. Why Getalong Enterprise Limited IPO?

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

  2. 2. How is Getalong Enterprise Limited IPO?

    Read the Getalong Enterprise Limited IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Getalong Enterprise Limited IPO what should investors do?

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

  4. 4. Is Getalong Enterprise Limited IPO good?

    Our recommendation for Getalong Enterprise Limited IPO is to avoid.

  5. 5. Is Getalong Enterprise Limited IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Getalong Enterprise Limited IPO.

  6. 6. When will Getalong Enterprise Limited IPO allotment status?

    The Getalong Enterprise Limited IPO allotment status will be available on or around Oct 5, 2021. The allotted shares will be credited in demat account by Oct 7, 2021. Visit Getalong Enterprise Limited IPO allotment status to check.

  7. 7. When will Getalong Enterprise Limited IPO list?

    The Getalong Enterprise Limited IPO will list on Friday, October 8, 2021, at BSE SME.