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Review By Dilip Davda on August 14, 2020
• This is the 6th Startup IPO for BSE Startup platform since launch.
• TCL is offering travel aggregator platform including rental services.
• Travel aggregator platform is highly competitive with organized/unorganized players.
• Financial performance so far is falling short to match asking price for IPO.
• Lead Manager has an average track record.
PREFACE:
BSE that lead the space for SME IPO since 2012 started Startup platform in 2019 which has seen five IPO listing till date. Now the sixth startup IPO is coming in this month. Details of the same are given here below:
ABOUT COMPANY:
Trekkingtoes.com Ltd. (TCL) is engaged in the business of offering travel aggregator platform to cab rental services to a wide range of customers via its on Call booking Service, Website i.e. www.hippocabs.com and mobile application (app) i.e. HippoCabs. The company built technology and data-driven solutions for every area of the business which enables it to increase efficiency. TCL works on an exclusive and non-exclusive model with driver and vendors. It has more than 1500 vendors with more than 4000 vehicles registered for intercity services. The company provides dynamic pricing and route-specific approach. Currently, its services cover approximately 200 cities across India.
TCL plans to replicate the route-specific approach which it applied on Jaipur-Delhi route on similar routes like Delhi- Agra, Delhi-Chandigarh, Delhi-Dehradun, Delhi - Manali, Jaipur - Agra and Mumbai - Pune to become a market leader on these routes. TCL is also engaged in DataBase trading, Software Consultancy services, Currency Conversion Services in Indian as well as International Markets.
The company is solving a core problem of finding return journeys for its driver-partners. TCL is able to achieve this through a combination of its algorithms and strategic approach. Using dynamic pricing algorithms, it has been able to increase the efficiency of return booking to a point where almost all driver-partners are able to get the return journeys directly through the company's platform. Following a route-specific approach, the company is able to manage the demand and supply on both sides of the route, enabling the client to pay only for one way and for drivers to have customers on both the sides.
It adheres to all necessary regulatory specifications.
ISSUE DETAILS/CAPITAL HISTORY:
To meets its strategic initiatives and investments (Rs. 3.00 cr.), repayment/prepayment of certain debts (Rs. 0.40 cr.) and general corpus fund (Rs. 0.87 cr.) needs, TCL is coming out with a maiden IPO of 433200 equity shares of Rs.10 each at a fixed price of Rs. 105 per share to mobilize Rs. 4.55 cr. The issue opens for subscription on August 18, 2020, and will close on August 20, 2020. Minimum application is to be made for 1200 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE Startup platform.
Issue constitutes 27.04% of the post issue paid-up capital of the company. The company will be spending Rs. 0.28 cr. for this IPO process. The issue is solely lead managed by Fast Track Finsec Pvt. Ltd. and KFin Technologies Pvt. Ltd. is the registrar to the issue. Nidhi Broking Services Pvt. Ltd. is also acting as a Market Maker for this company. Having raised initial equity and preferential issue in April 2019 (1105800 shares) at par, TCL issued 1112 shares at Rs. 5395.68 per share (rights issue) in November 2018 and 52200 shares at Rs. 110 per share in April 2020.
The average cost of acquisition of shares by the promoters is Rs.10.00 and Rs. 13.50 per share. Post issue, TCL's current paid-up equity capital of Rs. 1.17 cr. will stand enhanced to Rs.1.60 cr. With this IPO, the company is looking for a market cap of Rs. 16.82 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, TCL has posted total revenue/net profits of Rs. 3.17 cr. / Rs. - (0.44) cr. (FY18), Rs. 4.84 cr. / Rs. - (1.07) cr. (FY19) and Rs. 2.70 cr. / Rs. 0.03 cr. (FY20). It has suffered a setback for the concluded fiscal 2019-20.
For the last three fiscals, TCL has posted an average negative EPS of (Rs. 410.03) and RoNW of 92.41%. The issue is priced at a P/BV of 1312.5 based on its NAV (Net Asset Value) of Rs. 0.08 as on March 31, 2020, and at a P/BV of 3.28 based on post issue NAV of Rs. 32.03. Considering the negative average EPS for last three fiscals, its issue has negative pricing.
If we attribute FY20 earnings on fully diluted equity post issue, then asking price is at a P/E of around 552 making it exorbitantly priced.
COMPARISION WITH LISTED PEERS:
As per offer documents, TCL has no listed peers to compare with.
MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's performance front, this is the 4th mandate from its stable in the last three fiscals (including the ongoing one). Out of last 3 listings, one issue opened at a discount and the rest with premiums ranging from 0.08% to 0.58% on the day of listing. Thus it has an average track record.
Review By Dilip Davda on August 14, 2020
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 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: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Trekkingtoes.com Ltd offers an early investment opportunity in Trekkingtoes.com Ltd. A stock market investor can buy Hippo Cabs IPO shares by applying in IPO before Trekkingtoes.com Ltd shares get listed at the stock exchanges. An investor could invest in Hippo Cabs IPO for short term listing gain or a long term.
Read the Hippo Cabs IPO recommendations by the leading analyst and leading stock brokers.
Hippo Cabs IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Hippo Cabs IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Hippo Cabs IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Hippo Cabs IPO.
The Hippo Cabs IPO allotment status will be available on or around August 25, 2020. The allotted shares will be credited in demat account by August 27, 2020. Visit Hippo Cabs IPO allotment status to check.
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