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Review By Dilip Davda on July 24, 2023
• IENL is engaged in providing direct marketing solutions and related services.
• It marked static performance for FY21 and FY22.
• The sudden boost in its top and bottom line of FY23 raises eyebrows.
• Based on FY23 super earnings, the issue appears exorbitantly priced.
• The small equity base post-IPO indicates longer gestation for migration to the mainboard.
• Investors may skip this pricey issue.
PREFACE:
The company filed its prospectus with the concerned regulator on 19.07.23 and published an IPO ad in Business Standard dated 21.07.23, but the final offer documents were made available only post noon of Monday, July 24, 2023, after vigorous follow-up on the BSE Website. It appears that the company, the Exchange, and LM do not believe in compliance. The offer documents were obtained were still missing from LM and Company websites. It's really high time for SEBI to keep a tab on such deliberate delays. What is more important, the company's website was missing investors info page till Monday eve i.e. 17.10 hrs. of July 24, 2023. Can such lapses be tolerated by regulators?
ABOUT COMPANY:
Innovatus Entertainment Networks Ltd. (IENL) is engaged in providing all the Direct marketing solutions- Management, CRM, B2B and B2C, Activations and Exhibitions. It is a creative platform for complete 'Infotainment' with a 360-degree solution. The company focuses on concept development to creatives to a total turnkey presentation and on-ground execution.
The company is looking forward to reaching a new level of innovation, through integrated media and satisfactory engagement of the audience carving an exemplary niche in the field of 'Infotainment' and creating a unique identity of a dedicated company on the global map.
It offers a complete range of designing, media and printing services. IENL's strength is media buying where it understands the clients' marketing objective and uses the correct media to achieve that objective. The company is able to understand the various media available and use the right mix of media and the right prices to achieve the client's media objectives. As of the date of filing this offer document, it had 11 employees on its payroll.
ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with a maiden IPO of 1548000 equity shares of Rs. 10 each at a fixed price of Rs. 50 per share to mobilize Rs. 7.74 cr. The issue opens for subscription on July 25, 2023, and will close on July 27, 2023. The minimum application to be made is for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 39.11% of the post-IPO paid-up capital of the company. IENL is spending Rs. 0.70 cr. for this IPO process, and from the net proceeds, it will utilize Rs. 2.88 cr. for working capital, Rs. 2.64 cr. for purchasing exhibition-related material, and Rs. 1.52 cr. for general corporate purposes.
Inventure Merchant Banker Services Pvt. Ltd. is the sole lead manager and Purva Sharegistry (India) Pvt. Ltd. is the registrar of the issue. Pure Broking Pvt. Ltd. is the market maker for the company.
Having issued initial equity capital at par value, the company has issued further equity shares at a price of Rs. 50 per share in January 2023. It has also issued bonus shares in the ratio of 200 for 1 in January 2022. The average cost of acquisition of shares by the promoters is Rs. 0.05, and Rs. 50.00 per share.
Post-IPO, IENL's current paid-up equity capital of Rs. 2.41 cr. will stand enhanced to Rs. 3.96 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 19.79 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, IENL has posted a total revenue/net profit of Rs. 7.84 cr. / Rs. 0.33 cr. (FY21), Rs. 7.88 cr. / Rs. 0.30 cr. (FY22), and Rs. 10.94 cr. / Rs. 0.48 cr. (FY23). After the static top and bottom lines, the company reported marginal growth in its top and bottom lines.
For the last three fiscals, IENL has reported an average EPS of Rs. 1.78 and an average RoNW of 11.98%. The issue is priced at a P/BV of 2.49 based on its NAV of Rs. 20.06 as of March 31, 2023, and at a P/BV of 1.53 based on its post-IPO NAV of Rs. 32.78 per share.
If we attribute FY23 super earnings to post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 41. Thus the issue appears exorbitantly priced.
DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy post-listing, based on its financial performance and future prospects.
COMPARISON WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.
MERCHANT BANKER'S TRACK RECORD:
This is the 8th mandate from Inventure Merchantbanker in the last four fiscals (including the ongoing one). Out of the last 7 listings, 3 opened at discount, 1 opened at par and the rest listed at premiums ranging from 0.45% to 57.14% on the listing date. Most of the previous mandate from this LM is trading at a discount at present. It has a poor track record.
Review By Dilip Davda on July 24, 2023
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 Innovatus Entertainment Networks Limited offers an early investment opportunity in Innovatus Entertainment Networks Limited. A stock market investor can buy Innovatus Entertainment Networks IPO shares by applying in IPO before Innovatus Entertainment Networks Limited shares get listed at the stock exchanges. An investor could invest in Innovatus Entertainment Networks IPO for short term listing gain or a long term.
Read the Innovatus Entertainment Networks IPO recommendations by the leading analyst and leading stock brokers.
Innovatus Entertainment Networks IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Innovatus Entertainment Networks IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Innovatus Entertainment Networks IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Innovatus Entertainment Networks IPO.
The Innovatus Entertainment Networks IPO allotment status will be available on or around August 1, 2023. The allotted shares will be credited in demat account by August 3, 2023. Visit Innovatus Entertainment Networks IPO allotment status to check.
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