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Goblin India BSE SME IPO review (Subscribe for Long Term)

Review By Dilip Davda on Sep 27, 2019


•    The company is engaged in novel luggage bags and corporate gifting products.
•    GIL is selling its products under the branch name "Goblin"
•    It has a dealer network of 370+ in India and 250+ in Paris, France.
•    CIL has posted growth in top and bottom lines for the last three fiscals.
•    Setting up of manufacturing/assembling facility is underway.

ABOUT COMPANY:
Goblin India Ltd. (GIL) is an ISO9001:2015 certified travel Luggage Company engaged in the design, marketing and sale of travel, business and casual luggage as well as travel accessories.  As on 31.3.19, its products are sold in 6 states in India through a dealer network of 370+ and in Paris, France through a dealer network of 250+. The company is selling its products under the brand name "Goblin". Besides travel luggage products, GIL also involved in the trading and distribution of various products in multiple verticals such as digital consumer electronics, batteries and torches, office electronics, household items and other commodities to the corporate for the purpose of corporate gifting.


Today GIL is one of the reputed brands, specializing in travelling gears.  It is known for the novel luggage bag vendor at an affordable cost. It has built its trust and goodwill in the field of luggage and corporate gifting. GIL utilizes multiple channels including retail, wholesale, corporate gifting and e-commerce to sell its products. Currently, it has two own exclusive retail outlets in Ahmedabad and one exclusive store in Paris.  Its list of corporate gifting clients includes Corona Remedies, Torrent Pharma, Intas Pharma, IIM-Ahmedabad, Nirma Ltd., Sun Pharma, Cipla, Micro Labs, etc. GIL products are produced by third-party manufacturers located primarily in China as well as in India. Due to the outsourcing of the products, it allows GIL to allocate productions to the most competitive supplied and thus lowering its fixed costs.


ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans for setting up of manufacturing/assembling of ABS luggage BAGS (Rs. 1.83 cr.), working capital (Rs. 9.20 cr.) and general corpus fund needs, GIL is coming out with a maiden IPO of 2924000equity shares of Rs. 10 each via book building route. It has fixed the price band of Rs. 51 - Rs. 52 and mulls mobilizing Rs. 14.91 cr. - Rs. 15.20 cr. (based on lower and upper price bands). The issue opens for subscription on 30.09.19 and will close on 04.10.109. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue constitutes 27.99% of the post issue paid-up capital of the company. The issue is solely lead managed by Fast Track Finsec Pvt. Ltd. while Bigshare Services Pvt. Ltd. is the registrar to the issue. Vijeta Broking India Pvt. Ltd. is the market maker for this issue.


Having issued initial equity at par, GIL issued further equity in the price range of Rs. 20 to Rs. 89.34 per share between August 2004 and June 2019. It has also issued bonus shares in the ratio of 31 for 10 on 06.06.19 and in the ratio of 16 for 10 on 24.06.19. The average cost of acquisition of shares by the promoters is Rs. 4.30 and Rs. 5.30 per share. Post issue, GIL's current paid-up equity capital of Rs. 7.52 cr. will stand enhanced to Rs. 10.44 cr.


FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, on a consolidated basis, GIL has posted turnover/ net profits of Rs. 52.44 cr. / Rs. 0.63 cr. (FY17), Rs. 60.94 cr. / Rs. 3.09 cr. (FY18) and Rs. 68.49 cr. / Rs. 3.45 cr. (FY19). The holding period for trade receivables is showing rising trends from 2.05 months for FY18 to 2.15 months for FY20. For the last three fiscals, GIL has posted an average EPS of Rs. 42.16 and an average RoNW of 50.40% (on the basis of pre-bonus equity). The issue is priced at a P/BV of 0.44 on the basis of its NAV of Rs. 117.57 as on 31.3.19. However, its current NAV is around Rs. 11 and on this basis, the issue is priced at a P/BV of around 4.73. If we consider FY19 earnings and attribute it to fully diluted post issue equity then asking price is at a P/E of around 15.8 against the industry average of 46.


COMPARISION WITH LISTED PEERS:
As per the offer documents, GIL has shown VIP Ind. And Safari Ind. as its listed peers that are currently trading at a P/Es of around 50 and 56 (as on 27.09.19). However, they are not strictly comparable.


MERCHANT BANKER'S TRACK RECORD.
On merchant banker's front, this is the 2nd mandate from its stable in the last two fiscals (including the ongoing). The only listing that took place opened at a discount to offer price and thus this merchant banker has a dismal track record.


Conclusion / Investment Strategy

The merchant banker has the dismal track record and the company is way behind the two listed peers in term of volumes. However, considering the novel product portfolio and future plans, GIL is poised for bright prospects going forward. Hence investors may consider investment for the long term.

Reviewer recommends Subscribing to the issue for Long Term.

Review By Dilip Davda on Sep 27, 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

Goblin IPO FAQs

  1. 1. Why Goblin IPO?

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

  2. 2. How is Goblin IPO?

    Read the Goblin IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Goblin IPO what should investors do?

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

  4. 4. Is Goblin IPO good?

    Our recommendation for Goblin IPO is to subscribe for long term.

  5. 5. Is Goblin IPO worth Investing?

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

  6. 6. When will Goblin IPO allotment status?

    The Goblin IPO allotment status will be available on or around Oct 10, 2019. The allotted shares will be credited in demat account by Oct 14, 2019. Visit Goblin IPO allotment status to check.

  7. 7. When will Goblin IPO list?

    The Goblin IPO will list on Tuesday, October 15, 2019, at BSE SME.

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